announced that the following vacancies had been filled with effect from 15 February 1984:

1. (1) Pinetown, by the election of Mr Roger Marshall Burrows;
2. (2) Soutpansberg, by the election of Mr Thomas Langley.

Mr Speaker, I move without notice:

Agreed to.

Mr Speaker, for the information of hon members I want to point out that the hon the Minister of Finance will reply to the Second Reading debate on the Part Appropriation Bill immediately after the resumption of business at 17h15 on Wednesday, 22 February.

The Second Reading of the Additional Post Office Appropriation Bill will come up for discussion at 20h00 on the same day.

Mr Speaker, I move:

As hon members know, this House only disposes of the Appropriation Bill for the new year towards the end of the session, and consequently the Appropriation Act for the new financial year only comes into effect in about July of every year. However, the new financial year begins on 1 April 1984. Legislation must therefore be passed to authorized State expenditure, aimed only at the continuation of existing services, from 1 April 1984 until the Appropriation Bill is passed. That is the purpose of the Bill now under discussion, This year an amount of R6 500 million is required for this purpose. The increase from the 1983 figure of R5 600 million to this year’s amount of R6 500 million, represents approximately 16%.

In the past I have regularly cautioned against making deductions about the coming main budget by simply comparing the quantum of a year’s Part Appropriation with that of the previous year. There are various technical reasons why the comparison give no indication of what can be expected in the main budget for the coming year. Consequently I trust that hon members will not make invalid deductions again.

Without anticipating the Additional Appropriation for 1983-84 and the main budget of the ensuing financial year, it must have been clear to hon members for a long time already that owing to an unfortunate combination of circumstances over which we had no control, we have just gone through an extremely difficult financial year. The indications at present are that just as difficult, and in certain respects more critical, a year awaits us.

As usual I shall deal with the economic conditions and prospects in detail in my main budget next month. Meanwhile I consider it desirable on this occasion to give this House a brief sketch of the present situation and to indicate why certain policy steps were recently taken. I begin with a sketch of the economic milieu.

†The economic milieu

It is well-known that South Africa’s economic upswings have in the past usually been export-led and have tended to follow the upswings in the major industrial countries with a time lag of between six and fifteen months. A year ago, when I introduced last year’s Part Appropriation Bill, there were strong indications that, in accordance with this well established cyclical pattern, the South African economy was approaching the lower turning-point of the business cycle and was about to enter a new upward phase.

The United States economy was recovering from its recession and this augured well for our exports of minerals and other primary commodities. Moreover, in the wake of the emerging international debt crisis, the gold price had staged a strong recovery from about September 1982 and by mid-February 1983 was fluctuating around a level of $500 per ounce. In addition, the balance of payments had shown a spectacular improvement during the second half of 1982. The rand had accordingly appreciated between the middle of 1982 and the end of January 1983 by nearly 10% in terms of a weighted basket of other currencies, and the net foreign reserves had increased by more than R2,5 billion during this period. All in all, we had every reason to be gratified at the way the economic situation was developing.

In the months that followed, however, economic conditions and prospects were adversely affected by a number of new extraneous developments which came to pose quite exceptional challenges to the fiscal and monetary authorities.

To begin with, the gold price moved into a declining phase that was to have serious consequences for the South African economy. After reaching a peak of over $511 per ounce on 15 February 1983, the gold price averaged only $427 during the second quarter of 1983, $417 during the third quarter, $424 during the fourth quarter and a mere $373 thus far this year. In addition, South Africa’s non-gold exports remained relatively low during most of 1983 and only began to show a rising tendency during the closing months of the year.

A third adverse development was the worsening of the drought during the first three quarters of 1983. This situation was greatly relieved by the welcome rains in many parts of the country during the fourth quarter of 1983. More recently, however, the situation has deteriorated again and the early promise of good summer crops is not likely to be fulfilled. In the north-eastern part of the country, agricultural production has also be*en adversely affected by the recent floods.

The pernicious combination of a declining gold price, disappointing non-gold exports and unfavourable weather conditions not only had adverse effects on gross domestic product, the balance of payments on current account and the Budget, but also contributed to a net outflow of capital. It did so, for example, by creating the expectation that the rand would depreciate, which produced unfavourable so-called payments leads and lags, and by encouraging the sales of South African securities by foreigners to South African residents.

It is a tribute to the South African economy that, despite these new adverse extraneous developments, it performed well during 1983. It is true that, following a decline of about 1,5% in 1982, gross domestic product regressed by about 3% in real terms in 1983 as a whole. But it is significant that the cyclical downswing which commenced from a high level of economic activity in August 1981 “bottomed out” from about the second quarter of 1983. Indeed, real gross domestic expenditure, real gross domestic product and non-agricultural employment all increased again during the second half of 1983, while unemployment declined.

As part of the anticipated increase in real gross domestic expenditure in 1984, the volume of imports is expected to rise by about 2% from its existing low level. In value terms, the increase could be of the order of 8%. On these assumptions, the current account of the balance of payments can be expected to show a moderate surplus in 1984.

The anticipated increase in exports and in gross domestic expenditure should be sufficient to generate an increase in real gross domestic product of about 3% this year. Naturally, this figure will be influenced by the extent to which the recent floods in the north-eastern part of the country and the worsening drought in certain other areas affect real agricultural output.

A positive rate of economic growth of the order of, say, 3% this year would, of course, represent a considerable improvement on the negative growth rates of the past two years. Moreover, if accompanied by a lower rate of inflation than in the preceding years and by the maintenance of a sound balance of payments position, it would point the way to a further acceleration of growth in 1985.

As far as the balance of payments is concerned, the current account is provisionally estimated to have shown a surplus of roughly R500 million during 1983 as a whole. Compared with a revised deficit of R3,2 billion in 1982, this represented a substantial improvement. During the fourth quarter of 1983, however, the surplus on current account was temporarily transformed into a moderate deficit. This occurred despite a distinct and most welcome increase in non-gold exports, and was mainly produced by a decline in the value of the net gold output and an increase in imports. The latter increase was largely due to two special factors, namely, an abnormal and temporary spurt in oil imports and large imports of maize to make up for the drought-induced shortfall.

Given the decline in the gold price and the other adverse extraneous developments, the rand held up well in the foreign exchange market. Over the year 1983 as a whole the rand depreciated against the exceptionally strong United States dollar by 11,6%, but by only 4,3% in terms of a weighted basket of foreign currencies—including the dollar. Indeed, over this period it depreciated against sterling by only 1,5% and against the Swiss franc by only 3.7%, and appreciated against the German mark by 0,9%, and against the French franc by 9,2%.

From the point of view of curbing inflation, any depreciation of the rand in terms of other currencies is, of course, problematical. But from the point of view of counteracting a decline in domestic economic activity and maintaining equilibrium in the balance of payments this downward flexibility of the exchange rate has served the country well. It has, for example, prevented the rand price of gold from declining as much as the dollar price, thereby to a large extent insulating the gold mining industry from the sharp fall in the dollar price of its product. In addition, it has preserved the dividend payment potential of the industry not only in rand terms but also in terms of such important currencies as sterling, German marks and Swiss francs.

Fiscal and monetary policy

I turn now briefly to fiscal and monetary policy. Naturally, I shall deal with these matters more fully when I present the Budget next month. But already at this stage I should like to inform the House about certain important developments in this field.

When I introduced the Budget at the end of March last year, I rejected any policy of deliberate reflation or stimulation of the economy. Instead, I emphasized the need for a disinflationary “mix” of fiscal and monetary policy which would provide for continued restraint on Government spending, a relatively small Budget “deficit before borrowing” and effective control over the money supply. The March 1983 Budget was designed to fit into this strategy.

However, as I stated at the Prime Minister’s Anti-inflationary Conference in November last year, it became increasingly clear as the fiscal year progressed that both Government spending and the “deficit before borrowing” in the Budget would exceed the original estimates. This was largely because of essential and for the most part unavoidable increases in expenditures on drought relief, defence, food subsidies, salaries and interest on the public debt.

In retrospect, it is clear that our original policy intentions were to some extent overtaken during 1983 by the extraneous events which I have outlined today, and that the actual Budget “outturn” was somewhat more “expansionary” than originally intended. There are those who would argue that, in the prevailing circumstances, this expansionary Budget had the desirable contra-cyclical effect of stimulating demand and output at a time of relatively low economic activity. In other words, they would say that the expansionary “deeds” of the authorities were better than their conservative “words”. My own assessment, however, is less sanguine. The Budget “outturn” has certainly had some welcome contra-cyclical expansionary effects on the domestic economy. But it is incontrovertible that the combination of a sharply declining gold price, an extremely serious drought and a rising budgetary “deficit before borrowing” has created serious difficulties for the Treasury and the Reserve Bank in their efforts to control the money supply, to maintain a sound balance of payments and to reduce the rate of inflation.

We must guard against excessive increases in Government spending and in the “deficit before borrowing”. Such increases inevitably contribute to an excessive rate of increase of the money supply, to a weakening of the balance of payments, to the depreciation of the rand in terms of other currencies, and to inflation and inflationary expectations. I shall return to this point in a few minutes.

I believe that when the figures for the fiscal year 1983-84 become available, they will show that, taking the year as a whole, the Treasury and the Reserve Bank were successful in financing the larger than expected deficit before borrowing without recourse to net money creation by the banking system. It must be conceded, however, that during the second quarter of 1983 the “deficit before borrowing” was financed to an extent by net bank credit and that this contributed at the time to an undesirable acceleration of the rate of increase in the money supply. From the middle of June, however, the Treasury and the Reserve Bank have succeeded in financing the revenue shortfall through sales of Government stock on the capital market. To achieve this favourable result it was necessary to allow interest rates to rise above the low levels to which they had declined during the first quarter of 1983.

During the first half of 1983 monetary policy, like fiscal policy, was more expansionary than had been intended. At a seasonally adjusted annual rate, the so-called broad money supply or M2 increased during that period by about 27%. This was fundamentally the result of, firstly, the rapid rise in the net gold and foreign reserves between the middle of 1982 and February 1983 and, secondly, the net credit creation for the Government sector during the second quarter of 1983. Both these developments served to provide the banking system with adequate cash reserves to sustain a substantial increase in bank credit to the private sector. During the second half of 1983, however, the monetary authorities succeeded in slowing down the seasonally adjusted annual rate of increase of M2 to about 8%. The result was that, over 1983 as a whole, M2 increased by 16,5%, compared with 17,4% in 1982; 15,1% in 1981 and 27,4% in 1980. If it is taken into account that the income velocity of circulation of money has declined steadily since the introduction of more market-orientated methods of monetary policy in 1981, it is evident that the monetary authorities have made substantial progress in reducing the rate of increase of the money supply and, more importantly, of total monetary demand. This is also brought out by the fact that real gross domestic expenditure—consumption plus investment—declined for five consecutive quarters between the second quarter of 1982 and the middle of 1983.

The International Monetary Fund

In this regard it affords me pleasure to inform the House that new statistics which have just come to hand show that at the end of December 1983 South Africa once again met all the specific “performance criteria” contained in its loan agreement with the International Monetary Fund of November 1982. These “performance criteria” include specific targets for total domestic bank credit and net bank credit to the Government sector. South Africa has not made any further drawings under this agreement during the past year and, in fact, prepaid an amount of 50 million Special Drawing Rights. We consider it an important achievement to have met the targets agreed upon as we value our good relationship with the International Monetary Fund very highly and remain appreciative of the financial accommodation they have extended to us.

In putting monetary and fiscal policy under the microscope as I have done today, sight should not be lost of the fact that these policies have produced extremely satisfactory results. I have already dealt with the excellent balance of payments performance under difficult conditions. In addition, significant progress has been made during the past year in the battle against inflation. The twelve-month increase in the consumer price index, for example, was brought down from the 16,5% recorded as recently as May 1982, to 11% in December 1983. Indeed, some calculations would indicate a lower figure than that.

The decline in the rate of inflation was largely due to the slackening of domestic demand in 1982 and the first half of 1983, which not only served to reduce upward pressure on prices and labour costs but between the middle of 1982 and September 1983 also contributed to an appreciation of the rand and therefore a lower rate of increase in the rand prices of imports.

Nevertheless, despite these favourable results, we have to face up to the fact that the further decline in the gold price during recent months, together with the recent worsening of the drought and floods in the north-eastern part of the country, have left us with economic and financial problems which demand urgent attention.

I have already drawn attention to the fact that the “deficit before borrowing” in the Budget has tended to rise. It is true that over the year as a whole this deficit has been financed without new money creation. But there are clearly limits to a financing policy of this kind. If carried too far, such a policy would imply the persistent financing of current Government expenditure by means of borrowing—a policy which, if maintained for any length of time, would conflict with all accepted precepts of sound public finance. Such a policy would also “crowd out” other deserving borrowers in the public and private sectors.

It was precisely to avoid the development of problems of this kind that I increased the general sales tax from 6% to 7% with effect from 1 February 1984. I believe that this step has improved the “mix” of fiscal and monetary policy. By reducing the “deficit before borrowing”, and therefore the need for the Treasury to approach the capital market for additional funds, this tax increase should reduce both the downward pressure on the exchange rate of the rand and the upward pressure on interest rates.

In present circumstances there is only one way to avoid an unduly large Budget deficit and that is to reduce Government spending and/or to increase rates of taxation. Paradoxically, an increase in the general sales tax, unlike an increase in income tax, has the “statistical” effect of bringing about a once- and-for-all rise in the consumer price index. For this reason it gives rise to the popular but fallacious notion that the general sales tax has an “inflationary” impact. Quite the opposite is true. Taking the level of Government spending as given, any increase in direct or indirect taxation that has the effect of reducing the budgetary deficit before borrowing and the rate of increase of the money supply is in essence disinflationary in its effect on the economy. [Interjections.]

*Food subsidies and bread price

The opinion is held in certain circles that food products should be exempted from any GST. As I have repeatedly indicated, however, such exemption would entail serious administrative problems and would indeed necessitate a substantial increase in the general sales tax on the items that are being taxed. In this connection I want to point out that the Government annually spends considerable amounts on subsidies on items of food such as bread and maize, precisely in order to keep the prices to the public of certain basic foodstuffs low. This is something which is completely overlooked by our critics. In the present financial year, for example, the subsidy on bread will amount to as much as R275 million and on maize to almost R140 million. In the case of brown bread, which comprises more that three-quarters of the overall bread consumption, the subsidy per loaf at present amounts to almost one half of its retail price, GST included. The price of brown bread today is so unrealistically low as a result of this subsidy that there is every likelihood that this commodity is being incorrectly utilized by, for example, using brown bread to feed animals. This state of affairs cannot be tolerated and the Cabinet is at present giving urgent attention to the matter.

In the case of white bread the present subsidy is far less and there is no sound reason why the price should be subsidized in any way. In order to eliminate the present subsidy on white bread the Government has therefore decided to adjust the price of white bread by 6 cents per loaf with effect from Monday 20 February 1984. The present retail price of white bread will therefore be adjusted from 54 cents to 60 cents per loaf, GST included.

As far as brown bread is concerned, the position is far more problematical. If the subsidy per loaf becomes too large, incorrect utilization and wastage occurs, as I have already indicated. On the other hand, since brown bread is a basic food item, it is essential that an important measure of subsidy should in fact be retained. As an interim measure the Government has consequently decided to increase the price of brown bread by only 6 cents per unit at this stage, also with effect from 20 February 1984. This brings its retail price, GST included, up to 42 cents per loaf. That is definitely the cheapest bread that I am aware of in the world.

But even this adjustment will nevertheless leave us with an exceptionally large subsidy on brown bread for the ensuing financial year, something which is not financeable in our present predicament. The Government has consequently ordered an urgent investigation into a justified price policy for bread, so that any adjustments which may be necessary in future may take place at more regular intervals and in smaller amounts.

In the meantime it is apparent, however, that a further increase in bread prices later this year will be absolutely unavoidable. The extent of the increase will depend in particular on the volume of consumption and the wheat price adjustment in comparison with the subsidy which the Exchequer can afford.

Specific matters

There are a few specific matters which I should like to bring to the attention of hon members at this stage. I am referring to the allegation which is frequently made that the Government has lost control over Government expenditure; the nature and extent of the serious drought situation in Southern Africa and the role which the Treasury and the Land Bank are playing in affording financial relief of unparalleled proportions; the harmonization of income tax and finally the taxation of fringe benefits.

A. High Government expenditure

An allegation which is being heard quite frequently of late is that the Government has ostensibly “lost control over Government expenditure” and that these days little has come of financial discipline. I find this allegation unfortunate and a distortion of the facts. When a debate is being conducted on Government expenditure and financial discipline, it is not fair to consider the data pertaining to a single year only since various factors, of which I shall indicate a few, may temporarily interupt an established long-term tendency. This is in fact what happened this year and consequently the increase in real Government expenditure for this year will exceed that of previous years.

I want to emphasize, however, that as far as it is within my means, this will only be a short-lived deviation and I am confident that the established pattern of relatively small increases in Government expenditure, owing to stricter financial dscipline, will soon be resumed.

The primary factors contributing to the increase in Government expenditure this year were almost throughout of an unavoidable and unforeseen nature. Since I shall furnish full particulars of these factors during the debate on the Additional Appropriation I shall let only a few examples suffice here.

†I must say I have never seen any reference to this important point in any kind of discussion of Government spending whatsoever.

I want to let these examples suffice and express the hope that hon members will, in the ensuing debates, retain the necessary broad perspective in regard to Government spending and will refrain from one-sided and blinkered arguments. But before I leave the problems with which we are struggling in the agricultural sphere I should like to indicate what is being done by the Land Bank to try to alleviate the position of the farmer.

B. Drought aid by the Land Bank

The Land Bank itself has introduced various aid schemes in an effort to remedy the position of the farmers.

In this way it was decided in 1983 to introduce a drought aid scheme for the consolidation of farmers’ debts. The expectation was that the Land Bank’s contribution to this scheme would amount to between R200 million and R300 million, but the final amount will unquestionably be far in excess of the maximum.

The drought aid undertaken by the Land Bank was of a twofold nature, namely:

1. (a) Direct long-term loan assistance to individual farmers for a period as long as 22 years, with instalments held in abeyance for the first two years; and
2. (b) Indirect financial assistance to farmers in respect of production debts owed to co-operatives, including deferment for up to six years of the payment of co-operative debts to the Land Bank at a favourable interest rate. This interest rate is moreover subsidized by the Government on a sliding scale and the benefits are passed on to the members of the co-operative.

The above mentioned two schemes came into operation on 1 May 1983 and include all applications for assistance received by the Land Bank up to 31 March 1984.

The assistance rendered by the Land Bank up to 31 January 1984 under these schemes was as follows:

In addition to this financial assistance, the Land Bank also rendered direct loan assistance under a separate scheme to sugar farmers in Natal for the replanting of sugar cane, as well as production credit for the new season. This debt is repayable over a period of six years, and amounted to R25 271 000 on 31 January 1984.

For the 1983 financial year, the Land Bank Board granted an amount of R816 million to individual farmers by means of direct long-term loan assistance, compared with R238 million for the 1982 financial year. Apart from this the debts owed to the Land Bank by co-operatives, as at 31 December 1983, amounted to as much as R3 131 million.

Unfortunately it seems at present as though the devastating droughts which have been afflicting Southern Africa during the past few years, and which were alleviated in many places by good early rains, will continue this season. The negative effect of such an additional natural disaster cannot be over-emphasized: Not only will many farmers and institutions not be able to survive another year like the previous few years without further assistance, but with their high and ever-increasing burden of debt there are few farmers who will be able to get through the lean years unscathed.

The Government is at present giving this matter urgent consideration, and will, as in the past, always be sympathetically disposed towards and do everything in its power to make the situation as bearable as possible for everyone involved. But there should be no doubt about the fact that it will make our country poorer.

C. Harmonization of income tax

The third matter I wish to refer to is the harmonization of income tax or, to put it a different way, equal taxation of all population groups in South Africa.

Hon members will recall that I announced in my budget speech last year that, following upon negotiations with the various self-governing national states which at present have the right to tax the income of their citizens regardless of where such citizens are resident in South Africa, an agreement was reached with all those states that, with effect from the year of assessment commencing 1 March 1984, all assessable persons in South Africa would be taxed solely on the basis of the Income Tax Act, (Act No 58 of 1962), as amended.

In order to accomplish this, legislation will have to be passed by Parliament and the legislative assemblies of the various self-governing states. This legislation was prepared in close consultation with the Governments of those states and the Income Tax Amendment Bill, which was introduced today for consideration by Parliament, contains the basic provisions which will enable the Commissioner for Inland Revenue to discharge his additional obligations with effect from 1 March 1984.

I do not intend to deal in details with the various aspects of the matter at this juncture since that will be done when the amending Bill is under consideration. I do, however, wish to make a few general observations which I trust will eliminate excessive concern about the change-over from taxation in terms of the Black Taxation Act 1969, to taxation in terms of the Income Tax Act, 1962.

Hon members will know that, owing to the disparity between the tax scales in terms of the Black Taxation Act and those in terms of the Income Tax Act, the Government has been urged to take this step for a number of years. The change-over will mean that the threshold for accountability for the payment of tax will be raised from a taxable income of R1 801 for both married and unmarried taxpayers under the Black Taxation Act to a taxable income of R4 385 in the case of a married person or R3 576 in the case of an unmarried person.

It is estimated that with effect from 1 March this year, between 80% and 90% of all Black persons who are liable to pay tax will pay less than they do at present. It is true that the tax of a small group of higher-income Black taxpayers will be raised. Here I am thinking of certain unmarried taxpayers without dependents whose earnings are above the threshold which I have just mentioned, and also certain married taxpayers whose wives also earn an income. It should be noted that these taxpayers will, as from next month, be treated in precisely the same way as persons in other groups who find themselves in similar situations. In other words, any idea of so-called discrimination is completely eliminated.

As far as the earnings of married women are concerned, the Commissioner for Inland Revenue, when it is apparent that the employees tax deductions applicable to them and their spouses will amount to more than the tax which will be payable after a final assessment, will be prepared to issue instructions to their employers to reduce the deductions.

The possibility that the purpose of the change-over may be misunderstood is fully realized, and every effort has been made during the past six months to ensure that any doubts as to the object of the exercise and the consequences thereof as they affect them personally has been eliminated from the minds of as many Black taxpayers as possible. Inland Revenue officials have attended and addressed numerous meetings, discussion forums and other functions of employer organizations and have also held talks with many Black and other trade unions. In the same way a great many radio and television talks have been broadcast. Articles in clearly understandable language, articles specially written for this purpose, have been sent to almost every newspaper in the country. Every registered employer received a circular in which the implications of the change-over were explained.

I am indeed grateful to those many employers, large and small, who concentrated on explaining this matter very carefully in the interest of their employees. I have every reason to believe that they have performed this task well and that it will be possible to effect the change-over, generally speaking, without any extraordinary problems.

Unfortunately, however, there will also be exceptions. Some employers did not want to take the time or trouble to inform their Black employees properly, because, so I was told they thought that it was the responsibility of the authorities and not of the employers to provide the employees with this information. Such an attitude is unfortunate, for such employers are still going to pluck the bitter fruits of this short-sighted view.

In the meantime, as a further incentive, my department is at present investigating the possibility of making certain commercially manufactured video tapes available, with Government assistance, to employers, so that these video tapes may be shown to employees.

It has been suggested to me that, for various reasons not directly related to the merits of a uniform taxation system, but rather for reasons based on other considerations, that the introduction of the proposed legislation ought to be delayed. In view of the fact that, in contrast to what is being alleged, the establishment of a single taxation system is in fact aimed at eliminating rather than aggravating disparities, that most of the persons involved will pay less tax than before, and that any delay will be a great disappointment for by far the majority of the taxpayers in that they will not be able to pay less, I am firmly resolved to proceed with the proposed legislation and to implement the proposals with effect from the beginning of next month.

D. Fringe Benefits

Hon members are aware of the fact that this matter has already been thoroughly thrashed out by various investigating teams and these recently gave rise to a unanimous report from a representative parliamentary commission. The Government has accepted the report of the commission and is at present considering certain matters regarding the detailed application of the report.

Loan Levy

There is another matter which I should like to announce here. The loan levy which was paid by companies in respect of the 1977 year of assessment would normally have been repayable on 29 February 1984. For practical reasons, inter alia the serious tightening in the money market as a result of tax payments at the end of February each year, I have decided to advance the repayment date to 22 February 1984. A notice to this effect will appear tomorrow in the Government Gazette. The amounts to be paid out will be paid to almost 50 000 companies and will amount to a total of more than R360 million. The levy paid by individuals during the same tax year was paid during November 1979.

Conclusion

Mr Speaker, I do not, of course, wish to anticipate my main budget today, but I consider it my duty to point out at this early stage that the events of the past few months, including the decline in the gold price, the renewed drought conditions and the floods, have not made matters easier for us. If we wish to keep the economy strong and, more specifically, if we wish to maintain equilibrium in our balance of payments and prevent a new acceleration of the inflation rate, we will have to curb our Government expenditure strictly and ensure that the deficit before borrowing, in the Budget, does not become unhealthily large.

If we do not succeed in this objective we must expect interest rates to rise further—because the State will then have to borrow more on the capital market—or that the rand will depreciate further against other currencies. The latter would indeed be advantageous to certain exporters and local manufacturers in the short term. In the long term, however, it would inevitably entail a new acceleration in the inflation rate, and would do so because we would have to pay more in terms of rands for imported oil, capital goods, etc, which would have a cost-increasing effect on the economy. Given the fact that our principal trading partners are, by means of strict monetary and fiscal policy, at present succeeding in keeping their inflation rates considerably below our own, a permissive fiscal and monetary policy in South Africa would almost certainly plunge us into a vicious circle of inflation and exchange rate depreciation. I want to give the assurance today that the Government definitely does not intend to follow the latter course, namely that of depreciation and inflation. With the formulation and application of fiscal and monetary policy in the months which lie ahead, we shall not hesitate to take the necessary steps to ensure the health and strength of the South African economy.

Mr Speaker, I think you will permit me to deal with the good news first and with the bad news thereafter. The good news is of course the election of the new hon member for Pinetown. [Interjections.] You cannot imagine, Sir, what a marvellous experience it is for an old politician—and there are a few of us here who are really getting on in years—suddenly to find a maiden in their midst, even if it is a maiden wearing a big black beard. [Interjections.] It really is a marvellous experience. I also think …

It is not a gain.

Yes, the hon the Minister is correct. It is not a gain. It is also anything but a game. [Interjections.] Mr Speaker, hon members opposite say this is not a gain. When they lose Soutpansberg, however, they also contend it is not a loss. [Interjections.] Let us deal, however, with some of the implications of this by-election because in addition to the joy of this occasion I believe it is important that we should actually discuss the merits of the occasion.

The first issue, I believe, which arises is that there is little doubt that the jubilation that existed in NP benches that the result of the referendum meant that we as the PFP had permanently lost support, is a jubilation that has now come to an end. [Interjections.] That jubilation does not really exist any longer. [Interjections.] That is my first point, Mr Speaker. [Interjections.]

The second point we should remember is that there are some political entities in South Africa, of which the PFP is one, that one cannot wish away. One cannot pretend that we are not here. We are here. We do exist, and we have just shown that we will continue to exist. [Interjections.]

An existence which is only of nuisance value.

Only of nuisance value? [Interjections.] Mr Speaker, I can show that that nuisance value has so far been worth R20 to me. That is proved by the R20 note here in my hand. [Interjections.] I should like to tell the hon the Minister of Transport Affairs, because I actually happen to like him … [Interjections.] That hon Minister is a farmer, who is suffering as a result of the drought. On top of that he has many other problems too. He is running a department that has financial problems. What I think he should do is this. I think he and I should agree to give this R20 to an organization that perhaps needs it more than I do and also more than he does.

The hon the Minister of Finance! [Interjections.]

Yes, Sir, that may well be right. The hon the Minister of Finance may well be the one who needs this money most. [Interjections.] Nevertheless, be that as it may, I shall deal with him in a moment, in another context of course.

There are some questions, however, relating to this, which I should like to put to the hon the Minister of Finance, and also of course to the hon the Deputy Minister of Welfare and of Community Development, who, I believe, had quite a bit to say about the Pinetown by-election. I want to put the following very simple question. Did the NP supporters in Pinetown vote for the NRP or did they not?

Not a word out of them! [Interjections.]

The hon the Minister of Finance will be given the first chance to say yes or no.

I shall answer that question. [Interjections.]

What about the hon the Deputy Minister of Welfare and of Community Development, who was so vociferous about this matter? [Interjections.] If I cannot get a reply from the NP benches perhaps I should ask somebody on the NRP benches. Did they vote for you or did they not? [Interjections.] I find this quite fascinating because either the NP voted for them … [Interjections.] Did you say you voted for us? Please tell that to the hon members of the CP. They would want to hear that [Interjections.] The Minister of Industries, Commerce and Tourism says that the NP voted for the PFP in Pinetown. I just want to get some facts straight because either the NP voted for the NRP in which case I feel terribly sorry for them because there cannot be anybody left or, if they did not vote for them, they have a lawsuit on their hands because it would appear that there has been a breach of contract. What happened to that hon Deputy Minister and his promises? Where are the votes he was going to deliver? There is, of course, another alternative and that is that between the two of them they do not have enough to keep going. [Interjections.]

Harry, did you vote for us in the referendum? [Interjections.]

Mr Speaker, that hon Minister must be the most ignorant man in the country if he does not know how I voted because everybody else does.

The hon the Prime Minister is smiling and enjoying everything and I do not want to take the smile off his face. I like him when he is smiling.

He has not yet heard about Soutpansberg! [Interjections.]

No, really, do not let us spoil the whole thing for the hon the Prime Minister. He will hear about Soutpansberg in due course. I want to put this question to the hon the Prime Minister: What is he actually going to do at his Cabinet meeting when he has to analyse these results? As he knows, we will be having elections in August for the Coloureds and the Indians under the new constitutional dispensation. There are some fascinating things happening on the South African political scene. We have a new constitution coming in, we have some interesting results coming in and we have some very interesting proposals that are going to be put forward by the hon the Minister of Finance. What are we going to do about the Whites in their election?

No answer!

You know, Sir, it is quite amazing. Sometimes when I speak in this House I cannot hear myself speak and sometimes there is absolute silence. [Interjections.] I think that these are matters that need to be dealt with.

Having had this pleasure on this occasion, a pleasure which I am sure even the hon the Prime Minister will not begrudge us, I want now to come to the bad news. The bad news is the hon the Minister of Finance. I must say that there would appear to be no occasion on which the hon the Minister of Finance rises to speak that he does not give us bad news in South Africa. What the hon the Minister told us today was bad news for South Africa. It was bad news not because of the whole tone of his speech, which I shall deal with in a moment, but because of one of the most cynical things that I have ever seen done in politics in many years. The hon the Minister of Finance knows about the debate that centred around the increase in GST which he announced before Parliament met. I want to say in passing that it is quite fascinating to note that the increase in the bread price was announced the day after the by-election and not before. I find that an interesting fact to comment on but no doubt it was purely coincidental. [Interjections.] In this whole dispute about GST when an argument is advanced against an increase in GST, an argument that is supported by many organizations throughout South Africa to the effect that GST should not be imposed upon the essentials of life, what does the hon the Minister do? What does he do in reply to all these organizations who say that this tax must not be imposed upon the essentials of life because of the conditions that prevail in South Africa at the moment and because of the disparity in incomes? What does he do, Sir? He increases the price of the very commodity that is the basis of life in South Africa namely brown bread and bread generally. If that is not cynical in reply to all the demands that there should be a removal of GST from these essentials of life, then I do not know what is cynical and what is not.

Just before leaving this question of GST I should like to say that the hon the Minister issued a challenge to me when I said to him a little earlier in the session that he had said that there was not going to be an increase in GST. He said he had never said it. I happen to have in front of me here a photostat of a report which appeared in The Natal Mercury of 19 September 1983. The headline is “No rise in GST pledges Horwood”. The report then continues:

I never said that.

Let me quote further:

Here is the document and here is the proof.

That is not correct.

The hon the Minister says that is not correct, but could we have the repudiation of this by the hon the Minister? Could we have it that when he saw this great big headline—here it is and nobody can miss it: “No rise in GST pledged Horwood”—he said, What a dastardly untruth you told; how could you do it? The report said it happened at the NP Natal Congress, and a lot of people were at that congress. I did not have the privilege to be invited and I was not there, but they were there. The hon the Deputy Minister who had much to say about Pinetown was there. I ask, where was the repudiation? If that is not enough, there appeared another report. The Sunday Tribune also raised this issue when it reported:

It is funny that they both have the same quotation and both in inverted commas.

Both incorrect.

It also reported:

Where did all these people go to if it were not at the NP Congress that they heard this?

I have never made such a promise in my life.

What I do not understand is this: Why did the hon the Minister not immediately go to the public if he did not say it? Why did he not tell the public that this was not so?

The reality of this increase in GST combined with this increase in the price of bread is that we are looking at a situation in South Africa which ignores the reality of the population/income distribution in South Africa. The reality is that if we exclude the agricultural and domestic employees who are paid even less, we find that Black people in South Africa earn only 26% per capita as against White people. The official statistics for the third quarter of 1983 revealed that Blacks earned R319 and the Whites R1 213 per month. Whereas this kind of indirect taxation in a society where there is not this tremendous income gap can be justified, I believe that where there is this tremendous income gap it cannot be justified, and even less can anybody convince me that it can be justified that the bread price is now increased by 6 cents on top of an increase in GST by 1%. Whatever else can be said, we really cannot accept this and we cannot accept it lying down.

As there are many other things with which I should like to deal, I move as an amendment:

1. (1) to introduce more effective financial management;
2. (2) to remove inefficiencies in the handling of the economy and apply sound managerial and economic principles;
3. (3) to abandon wasteful concepts which are purely politically motivated;
4. (4) to introduce a more equitable system of taxation; and
5. (5) immediately to review all legislation which discriminates on the grounds of colour and race and thus hinders the economic progress of the country.”.

Sir, I should now like to deal with some of the other things with which the hon the Minister dealt in his speech. The impression I got from his speech was that he was trying to lay a foundation for something. He was laying a foundation saying: “Look here, 1983 was bad; 1984 looks as if it is going to be bad too, and I am just telling you that in fact things look pretty grim.” He then proceeded and used that foundation as an excuse for an immediate increase in the price of bread and as an excuse for certain other fundamental things he said.

As regards State expenditure he said there are three things that he wants to deal with. The first one he says nobody has ever paid attention to before in their comment, and that is the question of having issued stock at a discount. But, Sir, it is recognized practice that you issue stock—be it Government stock, local authority stock or the stock of any other institution—in order to give a certain yield to redemption. Now you can do that either by giving a particular return on the par value of the stock or you can give a lower return on the par value but issue the stock at a discount. If you decide that you are going to issue stock at a discount, there is no reason why you cannot amortize the discount over the period of the loan in exactly the same way as the purchaser who buys the stock says that his effective yield over the period of the stock is so and so because he has only paid the lesser amount for it. But now to use an accounting procedure in this particular way and at this particular time I do not think is, with great respect, a logical explanation. The one which is an explanation and which we accept as such, one about which we are disturbed as he is, is the drought. There is no doubt that the drought has affected us last year and it is unfortunate that it looks like affecting us also this year. There is also no doubt that we on this side of the House want the farmers to be given assistance because they are an integral part of the South African economy and has got to be made to survive. In other words, there have to be farmers after the drought; they must not disappear off the land. So we have to see that they are kept there. But at the same time we have to ensure that the money we give them and the manner in which the money is utilized is done in the most cost-effective manner, in a manner which benefits them as well as agriculture to the greatest extent.

The third reason is a reason which the Minister always introduces because he thinks that is the emotional way in dealing with it, and that is defence expenditure. The hon the Minister knows as well as I do that when it comes to the question of defence I am perhaps his ally. But let us look at the facts. I looked up the figures because I thought maybe I was wrong; that I had wrongly interpreted the figures. However, I found that one of the banks interpreted the figures the same way. Let me read what that particular bank had to say. It said this:

What is interesting in the speech the hon the Minister made today is that he did not refer to the actual excess expenditure on defence. Why did not the hon the Minister do that if there in fact was excess expenditure during the fourth quarter of last year?

The main budget is coming very soon.

The reality is that for the first three quarters of 1983 there was no excess expenditure on defence.

Wait and see.

But I am looking at the statistics which the hon the Minister published. Does the hon the Minister challenge the statistics which show that during the first three quarters of 1983 there was no excess defence expenditure?

You must take the year as a whole.

We are faced with the situation where the hon the Minister makes a speech in which he gives this as a reason without giving us the figures. Instead we have the emotional approach, that everytime we have to pay more, everytime there is a increase in taxes, everytime he has to do something, the Minister says he has to do it for defence. The reality is that if you need money for defence, then you say what you need and what you need it for—what the amount is and what it is going to be used for—and when there is actual defence expenditure we deal with it, and we deal with it on its merits. But do not always use it as a cloak, as an excuse for expenditure, especially in view of the fact that within the first three quarters of the year the Defence people kept strictly within their budget. I want to go one step further. Surely everybody knows that during the year there are going to be some campaigns and some counter-insurgency activity. Certainly these things do not come as a sudden surprise, like a bolt from the blue. Surely nobody believes that there is going to be complete peace on the border. We know that when the rainy season comes there is going to be certain activity and we know that there are certain times of the year when Swapo tries to infiltrate into South West Africa. We know all this, and yet the hon the Minister comes to this House every year and tells us that something unforeseen has happened. I think that our defence planning is far more effective than that. Our Defence people know what is likely to happen. They can anticipate what the problems are going to be and can anticipate what has to be budgeted for in that context.

Let me deal with another matter the hon the Minister dealt with, namely the question of the taxation of Blacks. I thought that we might deal with that tomorrow, because I see that notice has been given to a Bill in relation to that, but the hon the Minister has dealt with it and I therefore think it is necessary that I deal with some of the issues he has raised in respect of the question of Black taxation being put on the same level as all other taxation. We believe, and we have actually asked for it, that all taxpayers should be under the same law, that there should be no discrimination and that Blacks should be put on the same basis as everyone else. We know that in the past Blacks, particularly at the lower levels, paid more tax than Whites, particularly if they were married. We asked for the elimination of that kind of discrimination. We also accept that the elimination of the Black Taxation Act is going to make the administration much easier and that it is going to enable us to deal with the whole thing in one particular manner. The whole thing is advantageous as far as the administration is concerned as well as to 90% of Black taxpayers. If we look at all of that, we say that we welcome this concept. On the face of it, we think it is a good concept. However, as the hon the Minister himself has said, there has already been misunderstandings and problems and objections. The first of these is that the PAYE deductions for some married Black women are likely to be higher than they were under the Black Taxation Act. I would have hoped, and I think the hon member for Houghton as well, that the Government would have used this opportunity to introduce separate taxation for married women in the same way that it has applied to Black married women. However, the very contrary is the case. The Black married woman is now put in the same disadvantageous position as the White woman is in. On top of that, certain problems for the married Black woman arise from this new system. I just do not understand the hon the Minister. He had a golden opportunity to deal with the situation of married women and he let it go by.

The second point which arises, and the hon the Minister concedes it, is that there are some Black taxpayers who are actually going to pay more. Admittedly they are in the higher tax bracket and there are not that many of them. The other point which he also admits is that there is a high degree of misunderstanding and uncertainty I also believe there is a deliberate degree of misconstruction for ulterior motives by some people of this particular proposal. There are complaints of lack of consultation and contentions of a political nature of various kinds. All these things have caused to turn what I believe to be a very good thing into a marketing disaster. That is the tragedy of the whole thing. What worries me more than anything else, and it worries me even more after having heard the hon the Minister speak today, is that in the light of these circumstances and bringing the Blacks in under the ordinary taxation system together with Whites, Coloureds and Indians, if the hon the Minister is going to come in his budget on 28 March with an increase in personal tax, there is going to be even greater misunderstanding than exists today. The one appeal I want to make to the hon the Minister is that he must, for goodness sake, not bedevil the whole thing now by increasing personal income tax on 28 March.

Must we rather increase GST?

I have not said that you should raise GST. Do not come with that story. I am saying to you that if you are going to come with an increase in personal tax, you are going to bedevil the whole issue even more, because you are going to find that the Black man who has now come into this new system, something about which there is already a lot of misunderstanding, is suddenly going to find himself faced immediately with a tax increase within days after the new system coming into being. The new system for Blacks is going to come into operation on 1 March and the budget is on 28 March. You are looking for misunderstanding and problems. I am pleased to hear that at least at this eleventh hour we will spend a bit of money on commercial films and videos in order to get this thing across in a better fashion. The mistake which has been made is that it has been left to the employer to do most of the education of the people who will pay tax instead of the Government doing that education itself.

That is a shocking statement. The department has been working on it for six months.

But it is true. The hon the Minister says it is a shocking statement, but what is the reality? If the hon the Minister says that is a shocking statement I want to quote to him what a former Secretary for Inland Revenue said in a publication by Tucsa called Labour Mirror:

I concede that it is not all done through the employers but the bulk of it has come through the employers. That is not the best way to do it. The best way to do it is actually to put it across to the people themselves and show them what the benefit is which they will be getting. Above all, show them what the money is being spent on which they will contribute towards taxes. The Black man is being told—and I can quote it from papers—that the tax which he is paying is going towards the White man. The hon the Minister should say to the Blacks of South Africa what the tax is they will pay, what it will be used for and how it will be of benefit to them. This needs to be done as a public relations exercise. It is essential that it is done before that legislation is passed. We cannot afford misunderstanding on what is in fact a very good thing.

You are trying very hard, are you not?

I am trying to help and persuade the hon the Minister. Anybody who has listened to me, other than the hon the Minister, will have heard two things. The first thing is that I say it is a good system and in the second place that it should be sold better. If the hon the Minister did not understand that, he is “horende doof”. [Interjections.]

The hon the Minister then comes and says the story that Government expenditure is always exceeding the Budget is a propaganda trick. Let us look at some statistics. Let us forget about this year as he has already conceded that he will be way out. In fact, one publication has said that it will mean that 1983-84 would have been the worst overshoot since the Minister of Finance took office. I want to refer to some other statistics. In 1982-83 the percentage increase he announced in the Budget speech was 11,5% and the actual increase, 16,8%. In 1981-82 he announced an increase of 16,8% and the increase was actually 19,9%. In 1980-81 the increase announced was 14% and the actual increase, 19,8%. So is this criticism unjustified? We can go back and look at two records which this hon Minister holds. One is that ever since he has been in office we have had double-digit inflation. Secondly, with one exception, he has announced financial discipline and control of expenditure every year. Yet every year the Budget is substantially exceeded. That is his record. Yet he talks today of “unjustified” complaints which we are making. He should rather look at the statistics before he refers to that.

I would also like to refer to the question of fringe benefits. The hon the Minister said the Cabinet has adopted the report of the Commission. Why is the hon the Minister not publishing the report and the Bill? There was an undertaking given that in fact there would be a further opportunity for the interested parties to comment in respect of fringe benefits. Why are we not publishing it? If we do not publish it, it looks to me that it cannot come in this year but that we are going to have it postponed to another year. What is remarkable is that we have no difficulty in quickly increasing the price of brown bread by 6c but we seem to have a great reluctance to publish the Bill on fringe benefits and the report of the commission.

You have already said in public that you know it will not come in this year.

I forecast it. The hon the Minister will not say it. I want him to get up here and say whether it is going to come in this year or not.

I have to be responsible, you see. I cannot just talk in the air, like you. [Interjections.]

In other words, the new definition of responsibility is to say nothing and keep quiet while the public are waiting to hear what is going on? With great respect, Sir, that is not the case.

We can concede that things have gone wrong in the last year which were nobody’s fault. The drought is not the Minister’s fault. The gold price is not the Minister’s fault. However, the lack of good management of our finances in South Africa, the inefficiencies in the National Party Government, we do lay at the feet of this Minister and the Government. That is what he is responsible for and that is why we are moving our amendment to this particular Budget. We cannot go along with what is going on in South Africa where the natural disasters are given as the excuse for everything and the inefficiency is submerged beneath it and it is pretended that that inefficiency does not exist. That is why we are not going to be hoodwinked by this story any more.

Mr Speaker, I find it surprising that the hon member for Yeoville spoke about the result of the election in Pinetown. There was a majority of more than 2 000 in the 1981 election and now the majority is a mere 800.

Tell us about Soutpansberg.

I shall come to that. The hon member need not worry about that. The hon member for Yeoville regards this setback as a tremendous triumph, and everyone is jubilant about it. The hon member is someone who always likes to be on the winning side. We therefore do not begrudge him deriving a little pleasure from the result of the Pinetown election, as well as the one in Soutpansberg this time. As the hon the Deputy Minister for Environment Affairs and Fisheries said, the hon member has been defeated many times over the past few years. We therefore do not deny him getting a little excited this afternoon.

The last time the hon member won, was in the referendum. He won then, too. The hon member was not even visible in the referendum campaign, to put it mildly. Many people wondered where he was. However, on polling day he let his constituency know that things looked very good for Harry Schwarz. What was that supposed to mean? Had he contributed to Johannesburg’s fine yes majority, or had he impeded it? Or did he mean that he had voted “yes” and that he was going to drive his leaders into a corner at the PFP congress? What I am sure of, is that he persuaded the Leader of the Opposition and the PFP leadership to perform an about-face, to dispense with their boycott politics and to participate in the new constitutional dispensation. He therefore assisted in winning Pinetown. The hon member was consequently on the winning side in the PFP twice.

I shall come to the hon member again later. Firstly, I should just like to welcome the new Commissioner for Inland Revenue, Mr Schweppenhäuser. He is sitting in the hot seat. Numerous questions crop up on the ability of the Receiver of Revenue to expose all the people and companies who avoid tax. Other questions also crop up, such as whether certain consumer items should be exempt from GST, whether married women should be taxed separately, fringe benefits tax, to which the hon member referred, as well as many other matters. The more than 40 years he worked as Receiver of Revenue have equipped him particularly well for his task. We wish him success in his new post.

The hon member for Yeoville made a number of statements and asked a number of questions without really suggesting any solutions. We have become familiar with his style over the years. During the course of my speech I shall come back to the matters he touched on so briefly—as will other hon colleagues of mine. The hon the Deputy Minister of Finance taught the hon member such a lesson in the no-confidence debate that I am surprised that after only two weeks he is again coming forward with the same old arguments, statements and questions. Surely one does not bump one’s head twice in such a short space of time.

When the hon the Minister of Finance submitted his budget on 30 March 1983, he budgeted for State expenditure which was 10,3% higher than that for the 1982-83 financial year. For various reasons, however, this expenditure is exceeding this limit. The reasons for this are obvious, but I do just want to mention some of them for the record. The low gold price of the past few months is one of the reasons. The revenue from GST is also lower than was budgeted for. In addition, companies’ tax has declined considerably. Drought aid of almost R400 million was granted, and there was also additional defence expenditure of almost R400 million. There was also increased interest on State loans, increased subsidies on foodstuffs, as well as on higher transport costs which, in particular, benefits the lower income groups. The improved service benefits in the Public Service, which included occupational differentiation, can also be mentioned. One could hardly argue about the merits of this expenditure. It must be regarded as unavoidable and must also be accepted in the interests of the country. In the times and circumstances we are living in it is of the utmost importance that the efficiency of our Defence Force be increased continually. This costs money and requires financial sacrifice. However, it should not be underestimated as an investment for peace and stability in the whole of Southern Africa.

We cannot escape the effects of poor international economic conditions in an important trading country and one in which international goods transactions constitute a relatively large part of daily business activities. If things are not going well for our foreign trading partners, we cannot expect things to go well with us. Major adjustments must therefore be made to be able to absorb economic hardships.

The sharp decline of 8% in real production in agriculture in 1982 and a further 34% in the first half of 1983 not only weakened the financial position of the farmer, but of necessity had a negative effect on various sectors of the economy. Due to the considerably weakened spending capacity of the farmer, rural trade in particular has been adversely affected. Various other sectors have also been affected, for example those sectors from which agriculture purchases, as well as those to which agriculture supplies raw materials. According to the general manager of one of our largest corporations, tractor sales have declined by 60%, fertilizer sales by 46% and the sale of implements and fuel by 50% in 1983.

Agriculture is also an important supplier of raw materials in the economy, as I have already indicated. Approximately 25% of our total factory trade in this country is directly dependent on agriculture as a primary supplier of raw materials. Furthermore, it must be borne in mind that the exporting of certain agricultural products has been curtailed and even suspended and that maize, for example, has even had to be imported. It must also be accepted that the effect of the drought has not yet had its full impact on the economy. We are still in the throes of a serious drought. It is therefore obvious that increased State expenditure and how it should be financed contains certain implications for the economy in some way or another, directly or indirectly. There is therefore no doubt that the hon the Minister has duly taken such implications into account, particularly when he had to weigh up the various possible sources for financing the additional expenditure against one another.

To make use of bank credit would be contrary to the basic aim of the last budget. The capital market as a source of funds to finance the increased State expenditures must also be avoided. This would have led to a further increase in the interest rates in the capital market which, in turn, would obviously have led to a rise in the large interest burden on national debt. The so-called soft option could have been followed and money could have been created to assist in financing the shortfall. This would mean that the economic growth rate would be helped along and temporary room for low rates would be created. This would have weakened the balance of payments, however, and the price for this would have had to be paid in future years by a higher inflation rate. Another aspect which should not be overlooked, is the principle that it is not desirable to finance current expenditure with loans.

A final possibility is to decrease the shortfall in the first instance either by decreased State expenditure or higher taxation, or both. In my opinion, the choice is very simple, viz that if the present policy of non-inflationary financing of the shortfall in the State account is to be continued, tax increases are inevitable. Therefore in my opinion the decision to increase GST by 1% is the best one under the circumstances. It is also in accordance with the reform that is being striven for to broaden the tax base. The hon the Minister pointed out that it is not an inflationary step, and the official Opposition laughed about it. However, I wish to concede that if it should in fact have a negative influence, viz that it would increase the inflation rate by 0,7%, at least it is a non-recurring increase. In contrast, if bank credit were to be used, the inflationary consequences would be far worse.

The hon member for Yeoville kicked up a great fuss about GST on foodstuffs. I now want to read him something, and I trust that the hon member will pay attention. I quote from The Citizen of 2 February concerning what Mrs Margaret Lessing had to say, viz:

She concluded by saying:

To make a plea that GST should not be increased, or that it should even be decreased, sounds very fine and popular. Hon members opposite, however, must indicate to us which State expenditure they are opposed to. If they cannot tell us that, they must indicate what they suggest be done to combat expenditure. It is estimated that the increase of 1% will amount to between R600 million and R700 million. If this amount were to be obtained by way of a higher tax on income, it would mean an increase of at least 6% in income tax. We have just listened to a tirade by the hon member for Yeoville on the possibility of an increase in tax. I therefore believe hon members opposite should tell us what they prefer. Do they prefer an increase of 1% in GST or an increase of at least 6% in income tax? Of course, the hon member for Yeoville is apparently not in favour of increased income tax. However, he did not mention what he was in favour of. If hon members of his party should decide that they would rather have an increase of 6% in income tax, they must, of course, tell us whether this increase should be collected from people in the lower income groups, or perhaps the middle income group or perhaps the higher income group? Do they perhaps want it to be added to company tax, or perhaps to the tax paid by gold mines? To which one of these do they want it to be added? Or would they rather have it added to all of them? I trust that we shall receive a reply during the course of this debate.

That South Africa was, if fact, able to ward off the onslaughts of extremely difficult international business conditions, the military onslaught, as well as the drought, without any serious damage, says a great deal for the inherent strength of the country’s economy. It can therefore be rightly said that the adjustments that had to be made in order to subject the South Africa economy to the demands of international economic events, was, and still is, the right path.

Mr Speaker, I did not intend arguing with the CP and with its hon leader about politics in a financial debate. Of course, after the reprehensible misrepresentation and misinterpretation by the hon member for Waterberg during the no-confidence debate on what I was supposed to have said last year, I have no choice. The hon member for Waterberg even went so far as to repeat those things at a meeting in Vryburg, where the chairman of one of my district committees was present.

I read them a passage from your speech.

Yes, very well. Just give me a chance. The other day I kept quiet when the hon member for Waterberg was speaking. Mr Speaker, I should like to quote what the hon member for Waterberg said in the no-confidence debate (Hansard, 2 February 1984, col 301):

Mr Speaker, what did I say in the speech to which the hon member for Waterberg referred on that occasion?

Come to the point now, Charlie.

Wait a minute, I am coming to the point.

I hear you are going to the President’s Council, Charlie.

That, too, is an old HNP story which you are simply echoing. [Interjections.] The CP and the HNP are so similar that they are even speaking with one voice now, Mr Speaker. [Interjections.] The truth of what I said, Mr Speaker, is to be found in Hansard of Tuesday, 28 June 1983, and I quote (col 10451):

Mr Speaker, I still stand by what I said then. The hon member for Sunnyside, who spoke just after me that day, displayed a greater understanding of what I really meant than his leader. He commenced his speech as follows, and I quote:

To allege that I claimed that the new constitution was heralding a dispensation in which White political parties would become irrelevant, is the biggest lot of nonsense—and there is a lot of it—the hon member has ever uttered, and I think he owes us an apology. In fact, debates thus far prove that the CP cannot continue meaningfully in the new dispensation.

The crux of the CP’s problem was spelt out very well by Mr Jaap Marais, the leader of the HNP, on television at that time. He said:

Now it is interesting to take cognizance of the result in Soutpansberg, and in this regard I do not deny hon members of the CP their pleasure after all their setbacks. If it were not for the HNP, the CP would never have won in Soutpansberg. Mr Jaap Marais would never have stopped fighting if the CP had not moved over to the HNP out of this vacuum. It has been clear for a considerable length of time that the CP and the HNP were like-minded and, consequently, it will go down in history that the HNP has achieved its first victory in Soutpansberg after so many years in the wilderness. [Interjections.]

In addition, that party is having what if it cannot be called a confidence crisis, then at least it could be termed a problem regarding confidence with their leader. I refer for example to his objectionable statement at the so-called national festival (“volksfees”) at Ellis Park that a section of the Afrikaner nation are people who reject and scorn the Kingship of Christ. [Interjections.]

That was followed by a dangerous incitement of an audience at Nylstroom to the point that his reference to a White revolution was greeted with applause. [Interjections.] Does the hon the Leader of the CP deny that? Soon afterwards we heard and saw on television the vehemence with which he promised a renewed and even greater battle after the overwhelming yes vote. Since then there has been a barrage of strongly worded statements and insinuations which heightens the impression that when he went wrong in the referendum campaign, it was not only due to errors of judgment under pressure, but due to a strange obsession that had taken hold of him. First of all he said that the fact that a Black man with a bomb had been found near the Prime Minister in Pietermaritzburg was a strange tale that came to the fore at a strange time in the referendum. He followed this up with the following remark:

Indeed, Sir, it was not 66,6% but 66,3%. All the hon the Leader of the CP is achieving, is to intensify the already sharp divisions his political manoeuvres have caused. People are becoming more alienated from one another, and the essential restoration of national ties in other spheres besides politics are being delayed, if not completely upset.

The reaction of the hon member for Waterberg to the result of the referendum is another classical example. Before 2 November he urged the voters to vote “no” because the constitution would never again be able to be altered by the Whites once it had been put into operation. After 2 November he said that the CP’s battle to undo the constitution had only just begun. This means that the White CP does, in fact, think that it can alter it. Which of the two statements are his followers to believe? I shall leave the hon member and his party at that.

In conclusion I wish to state that the Government’s economic policy in extremely difficult world conditions is already producing sound results. There is a sound improvement in the balance of payments, foreign exchange control on non-residents has been abolished, the inflation rate has been effectively reduced, according to the Bureau for Economic Research at the University of Stellenbosch the recessionary conditions are disappearing, we are experiencing the beginning of economic recovery in the South African economy and exports are improving slowly. Considerable progress has also been made in the establishment of the confederation on the basis of the customs and monetary unions, the Government’s decentralization policy, regional development, the establishment of the Small Business Development Corporation and the Development Bank for Southern Africa.

With the referendum the hon the Prime Minister sought a mandate for a comprehensive revolutionary constitutional development plan for Southern Africa, and he received a convincing mandate for this from the White voters. The Government has already proved by its subsequent actions that it is carrying out this instruction by the voters with precision. South Africa has indeed made an appointment with the future, and with a Prime Minister like ours, and the NP, we shall enter the future with faith and confidence.

Mr Speaker, the hon member for Smithfield paid a visit to Soutpansberg. Of course I can understand that this is a sore spot with the NP, but I also paid a visit there. The hon member is now so obsessed with the HNP being on our side, but while I was there I noticed that the wife of Mr Daan de Jager, the former NP Senator, had signed the HNP letter of nomination. This demonstrates the morality, the integrity, the firmness of principle of the Nationalists.

The CP wants to thank Mr Mickey van der Walt most sincerely for the years he spent as head of his department. He rendered good service, and we wish him a very pleasant retirement. In the same breath we want to welcome Mr Schweppenhäuser and congratulate him on his appointment. We hope that he will also fare very well in the department.

I move as a further amendment:

1. (1) to grant more positive assistance to the farmers in order to enable them to recover from their precarious position;
2. (2) to take effective steps to curb the alarming increase in the cost of living; and
3. (3) to draw up accurate estimates and as a result—
   1. (a) has drastically exceeded the expenditure budgeted for; and
   2. (b) has had to announce interim increases in taxation.”.

In this Part Appropriation the hon the Minister of Finance is requesting an amount of R6 500 million. One can make a few calculations and see what the situation is. Let us now discuss figures and amounts for a moment. In 1982 the amount requested in the Additional Appropriation was R4 900 million and in 1983 it was R5 600 million, which represented an increase of 14%.

Surely you mean the Part Appropriation?

Yes, I mean the Part Appropriation. I thank the hon the Minister for correcting me.

Now in 1984 R6 500 million is being requested in the Part Appropriation, and this represents an increase of 16%. We are very concerned about the fact that a budget is submitted to this House, but in the course of the year the amounts budgeted for are drastically exceeded. What is the increase in the budget and actual Government expenditure? Let us take it as a percentage of the increase in the budget. In 1981-82 the increase in the amount budgeted for was 15,8%, but the actual increase came to 20,3%. In 1982-83 the increase in the amount budgeted for was 11,5%, whereas the actual increase was 17.5%. In 1983-84 the increase in the amount budgeted for was 10,3% and if we have to make an estimate on the basis of certain information we received from the hon the Minister and other amounts, the increase will in actual fact be 18%. We can expect an amount of approximately R1 500 million to be requested in the Additional Appropriation.

We wonder what became of financial discipline. Over the years the policy of the hon the Minister has been to apply discipline. This is all very well and we support him, but it seems to me the hon the Minister cannot introduce a proper financial budget because he is repeatedly being forced by the NP Government to introduce a political budget. The crux of the matter is that Government spending should not exceed the gross domestic product by more than 25%. It would seem that it is going to do so this-year because certain Government bodies are incurring expenses to an increasing extent without the appropriation being considered and they are not therefore reflected in the official expenditure figures.

The rapidly increasing burden of interest and other expenditure which the new constitutional dispensation will entail will possibly cause State expenditure to rise by between 18% and 20%. We have to face up to this. It seems to me as if this is going to become a reality and I wonder what the hon the Minister is going to do about it. He can increase either personal tax, company tax or general sales tax. Whether he increases only one of these or all three, it will still have an adverse effect on the economy in the long run. If he does not increase taxes there is an alternative. He can try to finance the large deficit expected by means of loans. If he does this, interest rates will soar, which will lead to higher costs for the private sector, which we cannot afford either. If he increases the State debt, with the resultant higher burden of interest, this will lead to future generations having to bear that burden for many years to come.

I want to give the hon the Minister some advice in this connection. I know that we are agreed on this matter. He has to introduce a real financial budget and not allow himself to be compelled to introduce a political budget. He should not use loan funds to finance current expenditure. He has to guard against that.

The R6 500 million being requested in this Part Appropriation, is a considerable sum and we hope that we shall receive more information about it in the Main Budget which will be introduced later. As I have already said, instead of increasing taxes loans may be raised. The question which now arises is where that money should be borrowed. Are we going to borrow it in South Africa or abroad, and at what interest rate? Recently—I think it was during the anti-inflation conference in November last year—the hon the Minister said:

As we have heard—I hope that my figures are far too high—as far as the Additional Appropriation is concerned R400 million is going to be requested for defence, R500 million for agriculture and a further R500 million to alleviate the burden of interest. As far as the defence budget is concerned, it is true that one can never calculate it accurately in advance. One can never say exactly how much defence expenditure is going to be. If unforeseen circumstances arise, the budget will of necessity be higher. We support the hon the Minister when he asks for extra money under such circumstances. Last year in Parliament and during the election campaign in the Northern Transvaal I pointed out that R49,8 million too little had been budget for operating subsidies and assistance to farmers. If the hon the Minister had not been forced to act otherwise and he could have made provision at that stage for the critical conditions prevailing in agriculture, it would not have been necessary for him to request an additional R500 million for agriculture now. As far as the burden of interest is concerned, a small amount may be required, but there is no excuse for such a large underappropriation. We think the additional amount will be R500 million, but even if it is considerably less, there is no excuse for it. This is something one can calculate in advance and this proves to me that there was absolute underappropriation for expenditure, so that there was room left for other expenditure.

To come at the eleventh hour with an Additional Appropriation requesting money for defence, for the burden of interest and for agriculture, after money has been spent on other things, is something we object to. We refuse to have a political appropriation because we want a financial appropriation. That is why I am asking the hon the Minister to be honest about these things.

As far as fiscal and monetary discipline are concerned, we as a party want to give the hon the Minister our full support. But where do we stand now? The hon the Prime Minister told us at the outset that he would concentrate on a “clean” administration, and we wonder what became of it. [Interjections.]

In general South Africa is a dry country. Historically the average annual rainfall is approximately 464 mm compared with a world annual average of 857 mm. Throughout the world it is accepted that an annual average of approximately 500 mm is needed for successful dryland farming. Approximately 65% of South Africa has an annual rainfall of less than 500 mm, and this is one of the problems in our country. Of course neither the Government nor anyone else can do anything about that, but there could have been better planning in the budget than there was.

It is said that 20% of our farmers produce 80% of all agricultural produce. I want to tell hon members that farmers are no longer able to keep their heads above water. Apart from the disasters and droughts, input costs are so high that even in normal years they cannot make the grade, let alone in years where there are critical droughts. Some of my colleagues will refer to this matter again later in the debate.

One has to consider what is happening to our people today. Our people in South Africa are becoming poorer and this has begun to happen during the past few years. Bearing the population growth in mind, the standard of living of the head of the family in our population has dropped by approximately 13% during the past two years. This is an extremely high figure.

What has happened during the past two years? The National Party was more concerned about introducing a new constitutional dispensation than about governing the country. In short, South Africa is now far poorer than it was two years ago. Unemployment has increased drastically. Company profits have declined and many business undertakings could no longer make the grade and have already closed down. There are many more summonses for debt.

I also want to refer to the matter of price increases. I have here a cutting from Beeld of Thursday, 5 January, which read as follows:

The report went on to refer to the increase in the prices of fertiliser and other commodities.

A man who wants to have a can of beer and brown bread this evening will have to pay more, because the price of beer and bread is also going up, as from today. There are price increases almost every day.

The hon the Prime Minister said that the National Party had linked itself irrevocably to the free market mechanism. In a country like South Africa one cannot allow a totally free market mechanism. There are certain areas where it can be allowed to a certain extent, but it cannot be applied totally.

What is the position as far as the consumer price index is concerned? In the USA it was 3,5% in 1983; in Japan it was 2%; in West Germany it was 3%; in France it was 9,5%; in the United Kingdom it was 5%; in Switzerland it was 3,5% and in the 24 countries belonging to the Organization for Economic Co-operation and Development it was 5%. In contrast it was between 10% and 12% in South Africa.

What is your solution, Jan?

Resign so that the CP can take over. Then all will be well in the country.

Let us consider the prime lending rates of the banks. In October 1982 it was 20% and in February 1983 it had dropped to 14% where it remained until May 1983. However, by the end of the year it was back to 20%. I maintain that no one can pay 20% interest and still keep their heads above water. Naturally the abolition of exchange control on non-residents in February 1983 together with the poor gold price created a dilemma for us. As far as the balance of payments is concerned, the outflow of funds from the Capital Account created a problem for us. However, we can try to take certain steps to improve the balance of payments. I shall make a few suggestions in this connection in a moment.

What is the situation in South Africa as far as employment opportunities are concerned? Let us put the 1970 index at 100 for both Whites and Blacks. In 1982 it was 124 for the Whites and in 1983 it was 124,6. But what is the position as far as the Blacks are concerned? Measured against the index of 100 for 1970, the figure rose to 128,5 in 1982 but dropped to 124,9 in 1983. Remember the annual population growth of the Blacks is 3%. This shows the drastic decline in employment opportunities for these people.

What do we find when we consider the nominal salary of Blacks? In 1970 it was R480 per annum, in 1976 it was R1 284 per annum and in 1982 it was R3 255 per annum. What is the result? When I was still in the National Party, I had occasion to refer to the wage gap which supposedly had to be narrowed. Here is proof that the wages of Blacks are simply being increased, but only two-thirds of them are working and the other one-third are not. The increased wages did not bring any relief for those people. Unemployment among Blacks is still between 7% and 8% and the people who do not work do not have food to eat either.

Let us consider personal savings. This gives one a very good indication of what is going on in the country. During the past three years there has been a tremendous drop in the personal savings ratio; this is the ratio of personal savings to available income. This means that on average, proportionally speaking John Citizen spent more than his spendable income. The historic average John Citizen saves is approximately 10% per annum. In 1980 it was 7% and in 1982 it was only 3,8%. According to the figures for the first nine months of 1983, it would seem as though the savings percentage for 1983 will be the lowest ever. Now we have to remember that if people cannot save, there can be no capital formation, and capital formation is one of the absolute necessities in this country.

What were the reasons for these low savings? Of course inflation was one of the reasons. Then there was the granting of excessive credit. People bought more than they could afford to. Then there was a rapid increase in salaries for the lower income groups of the population—I have already referred to this—without productivity being increased. People cannot simply be paid more money without an increase in production. South Africa is a developing country and needs capital. Personal savings make a very important contribution to the availability of capital for investment, which in its turn creates economic growth and more employment opportunities. This leads to general prosperity for both the individual and the country.

I should like to make an appeal to the consumers of South Africa: Refrain from using credit unnecessarily; try to save more; buy South African goods; and see if this does not improve your position and that of South Africa.

It is said we are living in a period of crisis. We are constantly being told that there is a crisis. If this is the case, let us consider this crisis for a moment. In times of crisis State expenditure has to be kept within bounds. Taxes should not be increased. This is what the hon the Prime Minister should do in the next budget. He should rather cut expenditure and make use of temporary measures to seek solutions. In order to protect our current balance of payments, he should, for example, lay down stricter requirements for hire purchase on motor vehicles so that less money is spent on the purchase of motor vehicles. In this way we shall be able to protect our balance of payments. As a result of the lower gold price and the fact that we could not export agricultural products—we had to import maize instead of exporting it—we experienced problems. Exports are an important facet of our economy. I want to ask the hon the Minister to reintroduce the export incentive measures which were lifted a few years ago. This is extremely urgent. Hon members will remember that in the ’seventies the Reynders Commission strongly emphasized that we had to promote exports. We should not be dependent solely on a high gold price. Things should improve in other spheres as well.

I have been asking myself what is in the interests of the country. It is in the interests of the country to buy South African products. We have to encourage our people to buy more South African products. In this way more employment opportunities will be created for all population groups. This will also lead to better utilization of production capacity, it will promote our growth rate, it will bring about lower unit costs and it will combat inflation. I want to ask the hon the Minister to make more use of the Consumer Council and to get it to publicize a Buy South African campaign. It will be far better for us to spend our time doing this than to have the new dispensation pushed down our throats all day long on the radio and on television. We should not encourage consumer spending now. We should export more and ensure that our balance of payments is not jeopardized. We do have certain priorities. Defence, for example, is one of these, and it has to remain one. However, when we have problems in finding sufficient money in the country, we should rather keep our temporary social infrastructure in check and save in that area than economize on priority areas. Three disasters hit South Africa. In the first place there was a severe drought; in the second place there were the floods, and in the third place there was the Government’s new constitutional dispensation. Of these three disasters, the last one was, of course, the worst. However, the CP has already begun at the Limpopo and has progressed from Waterberg to Soutpansberg. In this way we shall still manage to put things right all the way down to the Cape. [Interjections.]

Mr Speaker, I always listen to the hon member for Sunnyside with a great deal of interest. At the conclusion of his speech he referred to three great disasters that have occurred in South Africa, viz the drought, floods and the new constitutional dispensation. I should like to add a fourth and fifth disaster. The fourth disaster is if the hon member ever becomes this country’s Minister of Finance, and the fifth is if the hon member for Waterberg ever becomes this country’s Prime Minister. With the exception of the third disaster, if those two disasters are added, it completes the picture.

The hon member for Sunnyside is the CP’s chief spokesman on finance. However, he participated in the debate on the Part Appropriation here today, but he said nothing about it. His entire speech was devoted to the Additional Appropriation. I really do not understand him. He has been in this House for 20 years and he does not know the basic difference between the Part Appropriation and the Additional Appropriation. [Interjections.] As I said last year, I think he is serving his period of notice in this House. What is more, he does not even live in his constituency.

The hon member stated with a great flourish that, in his opinion, the Additional Appropriation would exceed 18%. He said that this implied a lack of financial discipline, but at least he added that the major problem that had to be faced was assistance to the farmers. I think that one of the finest steps the Government has taken in the financial sphere during the past year, is the assistance it gave, under difficult circumstances, to farmers who found themselves in a crisis. The hon member for Sunnyside also referred to the interest burden. However, it is not only in South Africa where interest rates are high, and it is obvious that high interest rates do cause problems. The defence of our country’s borders and the fact that our security situation must be given the highest priority, is, after all, in the interests of us all.

The hon member for Sunnyside also referred to our cost of living. Of course we are all concerned about this, but in my opinion the hon member could at least have had the decency to admit that the Government has succeeded, under difficult circumstances, during the past year to get the cost of living index in South Africa to drop to a lower level than it has been during the past five or six years. He summarily blamed the Government for the high cost of living, however. One could go on tearing apart the efforts of the hon member for Sunnyside in this way.

During the past few years I have continually had interjections from the hon member for Kuruman and the hon member for Rissik in this debate concerning the name of their newspaper. They are dead quiet now, however, since it would seem to me that that poor newspaper has died a merciful death. Interjections.] I should like to have seen how that newspaper could have been printed without any money. One of the editions was written by the hon member for Jeppe without any financial support, and if that is an example of what we can expect in the future, I really think hon members can bury that newspaper now, or else they must please get another name for it. [Interjections.]

Like an athlete in the 110 metre hurdles, we in South Africa are in the process of negotiating a series of difficult hurdles. On 2 November we negotiated the first hurdle. Undoubtedly there are obstacles between the hurdles; I concede that at the outset. For example, Soutpansberg was an obstacle. The next hurdle is the acceptance of the new dispensation by the Coloureds and the Indians, and the next one is its implementation. Hurdles we still have to mount, are what we are going to do about the Black people, agriculture and the drought. In view of what the hon the Minister of Finance said today, one of the most difficult hurdles we in South Africa shall have to mount—and this is not only a task for the Government, but the task of all the parties represented in this House, as well as all the people living in this country—is the hurdle of a difficult economic situation. Of course, one could advance many reasons as to why we in South Africa have problems in our economy today, but every person in South Africa has a responsibility and a duty to make a full contribution in this regard. In my opinion the standard of living in certain sectors in South Africa is far too high. One need only take cognizance of what is happening elsewhere to see that this is, in fact, the case.

I now want to come to an aspect to which the hon member for Sunnyside did not really refer, and, as far as I am concerned, this is the most important aspect of the Part Appropriation. It is an aspect that affects every man, woman and child in South Africa, and that is the aspect to which the hon member for Yeoville referred in detail, viz the lowering of the subsidy on bread, which means an increase in the price of bread. I wish to concede at the outset that it is a great pity that it has become necessary to take this drastic step. I believe that when one considers this, one should at least see the matter in its full perspective. I have always believed—in fact, I still believe—that a subsidy on a basic foodstuff is an excellent way of letting everyone share in the prosperity of this country. When the economy and the gold price are prospering, the investor, as well as the taxpayer prosper, because taxes may be decreased. The only way in which one can really let every member of the public benefit—particularly those who live below the breadline—from a healthy, strong economy and a sound gold price is, in fact, by way of a subsidy. That is quite correct.

Now it is true that in South Africa with its heterogeneous population, of which a considerable section falls in the lower income groups, the bread price and the bread subsidy have for decades been a highly emotional matter with socio-economic and political implications, which always has to be handled with a great deal of circumspection. For this very reason one has to consider this matter in its entirety, and one should not look at it in isolation and pull it apart, as the hon member for Yeoville did.

I said that when all was going well, it was a wonderful way of getting the benefits through to the very bottom. On the other hand, however, I think that when things are difficult, when there are problems in the economy, I am afraid we have no option; then all of us in this country have to tighten our belts somewhat. We have no option but to look at these aspects if the extent of the subsidy—and I should like to emphasize this very strongly once again—leads to other problems in the country. The present adjustment is purely a subsidy matter. It is purely a financial matter, and really has very little to do with the industry as such. However, I emphasize once again that even as far as this aspect is concerned, one should not see this matter as a purely financial one, but should consider it in its entirety and put it in perspective.

I now want to focus the attention of hon members on a few aspects with regard to this whole matter. As the hon the Minister said, after the recently announced increases the consumer’s price of bread will be 60c for a load of white bread and 42c for a loaf of brown bread. This means an increase of 11% and 16% respectively. It means that no further subsidy will be payable on white bread. I must say this is something I welcome. To me it is even a question of whether one need apply price control on white bread for much longer. In the case of brown bread, as far as I am concerned, the subsidy is being lowered from an unjustifiable almost 40% to 22%. I think this compares well with the guideline the hon the Minister of Finance laid down a number of years ago when he said that he would try to keep the subsidy on brown bread at approximately 20%. I think these new bread prices of 60c and 42c respectively, even without the subsidy, still compare particularly well with bread prices in Western countries, for example the USA, Europe and elsewhere, where bread with a similar mass costs almost three times as much as it does in South Africa.

I ask myself how much bread we eat. The hon member for Yeoville almost gave us to understand that many people eat nothing but bread. I wonder whether he is aware of what the figures are in this regard.

Do you hate people who eat bread?

No, in fact, I am very fond of people who eat bread. I made my living from people who eat bread. [Interjections.] If it depended on me, it would have suited me if the price were lowered. However, one cannot look at a situation like this selfishly. One must look at it in the interests of the country. The average consumption of bread in South Africa by Whites and Coloureds is eight loaves of bread per month. In the case of the urban Black man it is six loaves per month and in the case of the Black man in the homelands it is one and a half to two loaves per month. What is the effect of this? This increase is going to cost the Whites and Coloureds 50c extra per month. I want to say at the outset that I really have a great deal of experience on this subject. If I were to tell hon members how much white and brown bread is wasted in this country they would be surprised. It is simply unbelievable. I take myself as an example. Each day I buy a loaf of bread and the next day there is still a third of it left, but it is no longer so fresh. I then buy a fresh loaf. We all do that. It is not only the Whites who do this.

That is the wealthy man’s life.

No, Sir. Take the case of the urban Black man. What does he have for lunch? He buys a loaf of white bread and a Coke. He extracts all the soft bread and eats that, leaving crusts, which are the best part if one has one’s own teeth. [Interjections.] I want to concede this right now: A comparison between prices in South Africa with those in overseas countries is relative because the per capita income of the average person in South Africa is lower than it is in overseas countries. Consequently, the whole situation must be seen in its entirety.

I briefly want to give hon members the following background in this regard. In South Africa the producer receives R275 per ton for his wheat. In America the same farmer receives only R160 per ton. In America, however, the farmer produces 2,3 tons per hectare, whilst in South Africa the farmer gets only 1,3 tons per hectare as a result of the poor fertility of the soil, as well as poor climatic conditions. The result is that the return per hectare of the raw material in America is greater than in South Africa, financially speaking. I want to repeat these figures. In South Africa a ton of wheat costs R275, whilst a ton of bread costs R607. These are the figures that apply at present, and this means that the farmer really only receives 40% of the price of bread, whilst the man in the middle, ie the agent who handles the wheat, the miller, the baker and the retailer, receive 60%. Do you know what the figure is in America? In America one ton of wheat costs R160, whilst a ton of bread costs R3 200. This means that the farmers in America only receive 10% of the total cost of that bread, whilst the man in the middle receives 90%.

They do not have a control board.

As the hon the Deputy Minister rightly says, they do not have a control board. Whilst so much criticism has been levelled at control boards in South Africa in the past, I want to reiterate today that I know of no better example of the success of control than in this industry.

Why, then, apart from the financial position of the country, was it really necessary to increase the price of bread? The bread subsidy in South Africa costs R275 million per year at present. That is a great deal of money. This amount has increased tremendously over the past few years. In 1978 the bread subsidy was R90 million, in 1980 it was R190 million and at present it is R275 million. One of the important reasons for this is that a complete about-face has occurred in consumption as a result of price adjustments. Whilst in the past, for every 100 loaves of bread that were sold, people purchased 70 white loaves and 30 brown loaves, the position is precisely the opposite today. For every 20 loaves of white bread sold today, 80 loaves of brown bread are sold. This has had a substantial influence on the subsidy situation.

I should like to come to the problems that arise as a result of the fact that the subsidy on this specific product is becoming too high. I said that the subsidy on brown bread was almost 40% at present. The comparison between the price of bread and the price of maize meal is, after all, subjective and one should look at it with circumspection. I wish to point to this interesting figure. According to prevailing retail prices in Pretoria, a consumer pays 47c per kg for maize meal today, and 1 kg of maize meal gives one 1,7 kg of porridge—for those who still eat porridge. At the present bread price, the corresponding mass of brown bread would cost 66 cents. What has been happening recently, is that people, particularly those in the lower income group, have switched from maize porridge to bread due to the fact that bread is readily available.

But the maize has aflatoxin in it.

I am coming to that. I sometimes wonder whether the hon member for Langlaagte does not also have aflatoxin in him. [Interjections.]

You must think that I do not know anything about bread; I shall still take you to task.

There are other factors, too, that have caused the switch from maize to bread. One of these is the mixing in of yellow maize, but we had no option. This resulted in many consumers switching from maize to bread. The hon member for Langlaagte referred to the question of aflatoxin; this also had a substantial influence. Another factor is the improved standard of living of everyone in South Africa, of the lower income group as well. This has resulted in people switching from maize to bread as their standard of living improved. Over the past year a R22 million bread subsidy was paid in kwaZulu, and an enormous amount was paid in our independent homelands due to the switch to bread.

As a final point I wish to point out that someone mentioned that due to the narrowing of the gap between the price of brown bread, due to the higher subsidy, and the price of maize, some people find it far too tempting to use brown bread as fodder. This country and the Government certainly cannot afford to subsidize bread that is being fed to the pigs. That is totally impossible.

I wish to conclude on the same note on which I began. It is a great pity that it was necessary to lower the subsidy. If one sees this matter in its entirety and against the background against which one must assess it, I have no doubt that the Government had no option but to consider this situation and make an adjustment.

Mr Speaker, I should like to start by also recording our thanks to the retiring Commissioner of Inland Revenue, Mr Mickey van der Walt who, as we have heard, has now retired. We sincerely hope that he will enjoy his retirement and that it will be a very long and happy one. I should like to record that over the years I got to know Mr Van der Walt. I always found him to be a very approachable person and very helpful whenever one needed certain information. He certainly made my task a lot easier when I went to him for assistance and information. We would also like to congratulate Mr Schweppenhäuser on his appointment as Director General and we wish him a long and happy term of office.

I listened with great interest to what the hon member for Paarl had to say. He started off by saying that at the present time the Government is facing a large number of very difficult “hekkies”, as he called them, which it has to clear, some of which they have cleared successfully, although they were not so successful yesterday. He said that the most difficult hurdle was the difficult economic situation in which South Africa presently found itself. I would like to agree with the hon member that this is so and that the most difficult problem facing South Africa is the economy. Then he said that every South African has a duty to perform. I agree with him. He then spent most of his speech talking about the price of bread and the fact that the hon Minister has had to announce an increase in the price of bread. I must say that we in these benches are very sympathetic in respect of this problem, because we do not believe that a Government can continue to pour more and more money into subsidies. We are indebted to the hon member for indicating that the bread subsidy had increased from R90 million in 1970 to R275 million in 1983. One must realize that along with all the transport subsidies, which amount to nearly R700 million per annum, there is a limit to the rate at which the State can pour money into subsidies. What I liked about his speech, was when he related the difference in productivity between the wheat fanners in the United States and the wheat farmers of South Africa, where the yield in the United States is 2,3 tons per ha compared to 1,3 tons per ha in the Republic of South Africa. He tried to find an excuse for this by saying that perhaps our soil was not as fertile, and I am prepared to concede that that could be the case, but the point I want to stress is that productivity is the key to lower unit costs and to a higher economic standard of living in South Africa. The hon member said that every South African has a duty to perform. I want to put it to him that not only does the ordinary South African in the street have a duty to perform but so do that hon Minister and his colleagues in the Cabinet. We believe that they have a very important duty to perform, namely to see to it that the economy of South Africa is run correctly, that State funds are administered correctly and that the Budget which is passed by this Parliament is adhered to.

The measure before the House requires that we approve a Part Appropriation of R6 500 million, which amounts to approximately 16% more than was asked for this time last year. Despite the hon the Minister’s saying that this does not necessarily mean that expenditure in the coming year is going to rise by 16%, I believe we are justified in saying that if we take his past performance into consideration, we can expect Government spending to increase by at least 16% during the coming year. With inflation running at just over 10% and with a very low growth rate anticipated for the coming year—I would even go as far as to say that we may have yet another negative growth rate in the coming year—the hon the Minister is going to cause the State to increase its expenditure relative to the economy as a whole. This means that the average person is going to have less to spend. In simple terms it means that John Citizen will need to tighten his belt even further during the coming year.

As I have said before to the hon the Minister, we in these benches have no illusions whatsoever in regard to what it will take and what the sacrifices will be in order to turn our economy around from one where we have no growth rate to one where we do have a positive growth rate; to turn it around from one of overspending, in other words, one in which the nation is spending more than it is earning which is the basic reason why we have inflation in South Africa. We have to turn it around to become a nation which lives within its means. This is after all the only way in which we can lick inflation. It has to be beaten by productivity and earning more than we are spending. This is the only way in which we can get back to a solid growth pattern in the GDP. I am sure the hon the Minister will agree with us in that regard.

This must surely be our top economic priority. It must be because we have been warned repeatedly by demographic planners who have told us that we must achieve an average growth rate and a GDP of at least 5% from 1980 to the year 2000 if we are to beat the evils of unemployment and poverty. This is a thing about which we are most concerned. However, the facts are—and the hon the Minister has indicated as much today—that over the past two years we have been going backwards and we have had a negative growth rate. Therefore, we believe that the Government and this hon Minister in particular should take a good look at what has happened over the past two years.

A year ago we had high hopes and things looked a lot better than they are today. I even went so far as to compliment the hon the Minister on what he had done at that stage. I want to remind him about what I said, and I quote:

I appealed to him to ensure that we did not become complacent in South Africa and that we get on with the job of turning the economy around. That was 12 months ago and at that time we did not simply criticize the hon the Minister but in our amendment we put forward positive suggestions as to what should be done.

I will concede that the Government has tried to a degree. One of the legs of that amendment was, for example, that the Government should review its policies towards administered prices and tariffs and the financing of State corporations. I want to say in all fairness that the hon the Minister for Industries, Commerce and Tourism has taken positive steps in that direction during the past year. However, on the whole, the hon the Minister of Finance and his colleagues have fallen far short of what could have been achieved. In fact they fell far short of what we believe was expected of them under the circumstances which prevail. I will concede that there has been a measure of success and the hon the Minister has said that inflation has dropped by about three percentage points. However, it is still in double digits which is two to three times the inflation rate of our major trading partners.

Other than that, we believe the hon the Minister has failed dismally in two major areas. The first is in the control of the money supply and the second is in the control of Government spending. In the process I believe that we in South Africa are now in danger of losing this wonderful opportunity which the recession of the past year presented to us to reduce the inflation rate permanently. Five years ago South Africa was allowed to squander the enormous windfall which the high price of gold brought to South Africa. I regret to say that at the present time we are on the way to squandering the opportunity which the recession presented to us to lick inflation once and for all.

We need to accept that South Africans are living way beyond their means. The hon the Minister has not been able to control the money supply effectively and as a result the credit boom has plunged individuals and the nation into tremendous debt. Today the average South African owes twice as much as he did three to four years ago, and that is after taking both inflation and increases in income into account. What is probably worse, is that savings have dropped by half in real terms and we know that there cannot be any sound and real sustained economic growth without adequate savings which provide the financial resource to fuel that growth.

Not only are South Africans living beyond their means, but, despite the hon the Minister’s repeated claims that he believes in a conservative financial policy and that he believes in fiscal discipline and a tight rein on Government expenditure, he has consistently overspent his budget during the past five years. It is for this reason that I move as a further amendment:

1. (1) controlling the money supply so as to curb overspending in the private sector;
2. (2) reducing the rate of growth in Government spending;
3. (3) exercising the fiscal discipline required to prevent the Government from overspending its approved budget; and
4. (4) taking the necessary steps to increase productivity.”.

I should like to ask the hon the Minister this question: Will he deny that South Africa is living beyond its means? Can he deny that as a result of this the average standard of living of South Africans is dropping because of the resultant inflation and in the process South Africa is falling deeper into debt?

Last month two major banks, the Standard Bank and Volkskas, released in-depth economic reports which clearly indicate that what I have said is so. In these reports it is clearly stated that the average standard of living of South Africans has dropped by 13% over the past three years. Yet the country is still living beyond its means. Volkskas says in its report that since 1981 the man in the street “has been spending proportionately more than the increase in his disposable income”. The report goes on to say that the manner in which the man in the street was prepared to use credit to satisfy his desire to buy bordered on recklessness in handling his financial affairs. The Standard Bank says that during the past nine months South Africans have maintained living standards appropriate to a gold price of $500 per ounce and appropriate to rising exports, an unrealistic approach compared with the unfavourable conditions overseas. The bank complains—and this is the complaint against the hon the Minister—that official South African fiscal policy shielded many sectors of the economy from the effects of the recession and created complacency.

You want me to put up taxes, do you? [Interjections.]

The hon the Minister says: “Put up taxes”. I suggest to him he should cut his expenditure. [Interjections.]

[Inaudible.]

The Minister can reply. He has the time. I say he must cut his expenditure and that is what my amendment requests.

In addition, the Government has failed to contain its own spending. That is the point I am making. I should like to suggest to the hon the Minister that his fiscal policy has been far too accommodating by yielding to political pressure. I ask him whether he will not agree with me that on many occasions political expenditure has overruled sound fiscal management. Recently a leading economist was quoted as saying that South Africans have been living in a dream world; they have been free-wheeling on easy-to-get credit, using personal loans from banks and rollover credit from their credit cards; they have been spending freely, using hire purchase and leasing facilities; and the banks have been financing this expanding demand for credit by creating liquid assets which have enabled them continually to increase their advances.

The only answer to this problem appears to be tougher fiscal measures as well as high rates. The question is whether the Government will allow this to happen. The authorities have attempted to control the money supply by using the management of interest rates and exchange rates as instruments of control, but it appears that this is not achieving the desired effects. Perhaps the hon the Minister will comment on this in his reply.

I should like to put it to the hon the Minister that perhaps he should put greater emphasis on controlling the high-powered money supply, ie the notes issue and cash reserves of the banking system. Whilst I concede that there have been improvements in the growth of the money supply since the second quarter of 1982, when it reached the ridiculous figure of 38%, I want to ask the hon the Minister to correct an impression I have if it is wrong. In fact, this afternoon he said the rate averaged 16,5% in 1983. Is this not way above the 10% to 12% growth target which the Reserve Bank set for itself? The hon the Minister has overshot it by 4,5%. I believe he just has to get this matter of the money supply under control.

The other two legs of my amendment concern Government spending and productivity. I sincerely hope that the hon the Minister clearly understands, as has already been said by the hon member for Yeoville and others, that South Africans are no longer impressed by his claims of maintaining a disciplined fiscal policy. The hon the Minister has come with excuses such as the drought, the lower gold price, increased defence expenditure, higher interest rates etc, saying that these have pushed up his costs, but the facts are that for something like five years now—this was also stated by the hon member for Sunnyside who also quoted the relevant figures—the hon the Minister has consistently overshot his budgeted figure by a considerable amount. I want to put it to the hon the Minister that his credibility when it comes to matters such as believing in a disciplined economy, fiscal discipline etc, is now wearing a bit thin.

The final point I want to make concerns productivity. It is generally accepted that economic growth is largely dependent upon increased productivity. We are all aware of the tremendous quantities of capital that have been invested in South Africa’s infrastructure and also in the industrial, mining and agricultural sectors over the past ten years. If one adds this all up it probably runs into tens of billions of rands invested in various projects, many of which are supposed to result in increased productivity. What real benefit has this brought to South Africa in terms of productivity? In its 1983 annual report the National Productivity Institute states that productivity improvement played little or no role in the economic growth of South Africa during the 12 year period from 1970 to 1982. During this period the productivity growth rates of capital and labour combined contributed on average only 1,9% towards the annual average economic growth. Compare this with the following quotation:

In conclusion, I believe that South Africa is at the economic crossroads. The recession is deepening, inflation remains at an unacceptably high level and yet the hon the Minister goes merrily on his way asking for more and more money. Taxes are being raised to finance the increased expenditure and Government borrowings are placing pressure on the money market. The prime rate is at present 20% and there is talk of its rising further to maybe 21% or 22%. We hear daily of people being laid off. I have newspaper reports with me stating “700 Nissan workers lose their jobs” and “Motor industry has axed 2 000”. So it goes on. Therefore I urge the hon the Minister to take heed to these matters, and particularly the remedial measures contained in my amendment.

Mr Speaker, the hon member for Amanzimtoti, the hon member for Yeoville and the hon member for Sunny-side have all moved amendments. They gave the legs of their amendments, but they did nothing to motivate them. We have heard nothing constructive from any of these three hon members to motivate their amendments. All we heard was destructive criticism.

[Inaudible.]

The hon member for Durban Point must be quiet. He had a disappointment yesterday and I think he must just keep quiet now. Funnily enough, the hon member for Amanzimtoti said that South Africa is at the financial crossroads but the NRP should not laugh as they are at the political crossroads.

The hon member for Amanzimtoti dealt with inflation and said that productivity should be increased. Every hon member on this side of the House is doing his utmost to ensure increased productivity and, as the hon member knows, the Government has taken various steps to increase productivity. However, when it comes to inflation, one could cut the money supply drastically; that is a sure way of bringing down the inflation rate, but if one cuts the money supply too drastically one will have massive unemployment in this country. I am sure the hon member will be the first one to concede that we cannot afford massive unemployment in South Africa.

The hon member for Amanzimtoti also said that he wanted less unemployment in the country. All of us want less unemployment, and I should like to give him one example of the steps taken by the Government to bring this about. From 1 April 1982 to 31 March 1983 the Government introduced certain massive decentralization concessions as a result of which approximately R2 000 million worth of applications were received while job opportunities for 56 000 people were created, which in reality means that hundreds of thousands of people benefited by it. That took place during a recessionary period; in other words, during a more flourishing period those figures will increase considerably.

We will not live so long.

That hon member may not live so long politically but I certainly will. [Interjections.]

What happened in Walmer?

I will tell that hon member what happened in Cape Town Gardens in the referendum.

The hon member for Yeoville tried to hurl certain insults at the hon the Minister of Finance, despite the fact that the hon member for Yeoville knows that the people in commerce and industry and also the general public consider the hon the Minister of Finance to be one of the best if not the best Minister of Finance that this country has ever had. The hon member for Yeoville blames the hon the Minister’s lack of management of the country’s finances for most of our problems, but he knows that the hon the Minister Has a financial management team. The managerial team of the hon the Minister consists of top financial officials, the best that any country can offer. The hon the Minister is the captain of the team and the hon the Deputy Minister the vice captain. The hon the Minister together with the hon the Deputy Minister do not manage the country’s finances on their own but they and their officials operate as a team. I think the reflection cast by the hon member for Yeoville on this most efficient team is most unfortunate. [Interjections.] I cannot hear what the hon member is saying. [Interjections.]

Order! The hon member may proceed.

Mr Speaker, I hope that I will be granted injury time. It seems to me that the hon member for Yeoville wants a second opportunity to speak because he did not fare so well at his first attempt.

I should like to pay tribute today to each and every one of the financial team who assists the hon the Minister. We on this side of the House appreciate their services; we appreciate what the hon the Minister and the hon the Deputy Minister do despite what the hon member for Yeoville said.

The official Opposition and certain other hon members on the other side together with their newspapers are determined to be prophets of gloom and doom in this country. They are determined to carry on in a spirit of negativism throughout the length and breadth of the country. They do it in the financial field, indeed in every field, and I should like to quote some examples. It is almost as though they want to break the morale of the people and encourage a feeling of pessimism in the country. Of course, the enemies of South Africa rejoice, because if the PFP succeeds in its attitude it will be of tremendous assistance to those who want a state of chaos in South Africa. Let us look at some examples of this in the various fields. The Opposition is well aware of the fact that there has been a worldwide recession. The price of gold has dropped substantially and our trading partners are having severe difficulties while our country is experiencing one of the worst droughts in living memory. The Opposition also knows that the Government has embarked upon a programme to improve the quality of life of all the peoples in South Africa, especially that of the poorer people. They are also well aware of the fact that money is badly needed for essential services and that the Government had no alternative but to increase GST. Yet the PFP and their newspapers portray part of this tax as one that the Government has deliberately introduced in order to raise tax from the poor. I should like the hon member for Yeoville to listen to me if he can. [Interjections.] Some Opposition speakers and even some Opposition newspapers have said that this tax is raised deliberately to tax the poor. One spokesman even referred to it as an evil. Now, Mr Speaker, is that not an absolute disgrace? Hon members of the Opposition tried to exploit the situation by encouraging people to have a bitter resentment for this tax, while the proceeds assist those very people who are paying this tax. I will go into GST later in greater detail. Meanwhile, I should like to hear from the hon member for Yeoville whether he agrees with remarks of that nature. Does he agree that ordinary tax is an evil? Does he agree that it is only hitting the poor? Whether he agrees with it or not, he is the one who said it, according to The Cape Times of 25 January 1984. I notice the hon member for Yeoville now pretends to be conducting a conversation with the hon member for Johannesburg North. This is of course merely because he does not want to respond to what I am saying.

I should like to deal with a few other examples of how it is said the morale of the country is being undermined by GST. [Interjections.] The hon the Leader of the Opposition reacts in a destructive manner to every genuine effort to improve the situation in South Africa. He leads a boycott of the President’s Council, in which people of colour had managed to reach an accommodation despite the boycotts by the PFP and despite the failure of that party to make a meaningful contribution. Furthermore the hon the Leader of the Opposition joined hands with the CP during the referendum by appealing to the negativism of people to vote “no”. In his desperation he saw that his own people were deserting him in their tens of thousands.

The hon the Leader of the Opposition then resorted to calling on Black leaders to participate in helping him to obtain a no-vote majority. He knows full well that an action of this nature would stir up feelings between Black and White in South Africa. [Interjections.]

Order!

Fortunately the electorate saw through this whole strategy and rejected the hon the Leader of the Opposition and his party. [Interjections.]

Order!

They told him in no uncertain terms …

Mr Speaker, may I put a question to the hon member?

No, Mr Speaker. I do not have time to waste. [Interjections.]

Order!

Mr Speaker, the electorate told the PFP in no uncertain terms that they did not care whether their hon leader staked his career on the referendum or not. In fact, by voting “yes” his supporters gave him a clear message of rejection. The hon the Leader of the Opposition then said he and his party now wanted to participate in the new constitutional dispensation.

Let us test how genuine they are about their participation. Does the hon the Leader of the Opposition genuinely want to participate, or is that only a convenient decision in order to appease his supporters? What has the hon the Leader of the Opposition done in the months since his decision to participate, and to encourage the Coloured and the Indian people to participate? He has done absolutely nothing.

Is the hon the Leader of the Opposition prepared to encourage the Coloured and the Indian to participate in the new constitutional dispensation despite the fact that he conducted a no-vote campaign in South Africa? [Interjections.]

Why do you not table those questions? Can you not see the hon the Leader of the Opposition is not present in the House?

I informed the hon the Leader of the Opposition that I was going to address the remarks to him today. He apologized to me for not being able to be present here this afternoon. [Interjections.]

Mr Speaker, the hon member for Yeoville does not believe that his hon leader is genuine about meaningful participation or that he will encourage Coloureds and Indians to participate in the new dispensation.

You are talking absolute rubbish now.

In order to bear out what I say I want to quote from a newspaper report. According to Die Oosterlig of 9 January 1984 the hon member for Yeoville said, and I quote:

I remember, Mr Speaker, that statement was made after the decision by the PFP to participate in the new dispensation. The hon member for Yeoville says that if it is correct that the PFP is going to participate in the new dispensation, members of that party should ask themselves whether it is correct that they discourage Coloureds and Indians should they want to participate. By posing that question the hon member for Yeoville proves that he is only unhappy about the bona fides of the PFP, but that he also wants to know why they are doing nothing to encourage the Coloured and Indian leaders to participate.

I should like to quote further from the same newspaper report carrying the statement by the hon member for Yeoville to which I have already referred. He says:

In other words, the hon member for Yeoville is propagating here exactly what the NP and the NRP were propagating during the referendum campaign. In the same statement the hon member for Yeoville says further:

In other words, he told the leaders of this party: if it was right for you to involve Chief Buthelezi in the referendum with White audiences in order to encourage them to vote no, what right have the PFP to say that they do not wish to influence Coloured and Indian people to participate in the new constitution? The hon member for Yeoville has shown the hon Leader of the Opposition up for what he is. He has effectively passed a motion of no confidence in the hon the Leader of the Opposition. I want to ask the hon member for Yeoville whether or not he made this statement.

I did not say what you have just misquoted.

Here is the hon member’s statement. I have just read it.

Don’t come along here with that sort of rubbish.

Now that the hon member for Yeoville knows what the outcome at Pinetown is he thinks that there may be a possibility for him in the PFP. [Interjections.]

The Opposition has now introduced this negative spirit into our financial position as well. The hon the Minister of Finance has introduced this Part Appropriation Bill under the most difficult circumstances. Departments have had to curtail expenditure because of a lack of finance. We know that our exports are down in the economies of our major trading partners, the gold price has dropped and the country has suffered one of the worst droughts ever. Despite all these adverse conditions South Africa has man-aged well because of its economic stability, because of its inherent economic strength and because of sound economic management to maintain equilibrium and economic stability in the country. The Argus of 25 January 1983 refers to millions of rands of GST evasion. Unless one has an inspector at every till in South Africa there will not be 100% GST collections, not in South Africa and not anywhere else in the world. However, let us look at the positive side. A few weeks ago the hon the Deputy Minister of Finance told us in this House that over the past three years we had budgeted for an amount of R7 200 million in respect of GST and that the amount received had in fact been R6 965 million which was 97% of the amount budgeted for. Last year there were 9 000 inspections by sales tax inspectors and an amount of about R25 million was collected from businesses in respect of irregularities. There were 144 000 businesses in South Africa that paid sales tax on a monthly basis and 93 000 that paid it on an annual basis. The workforce of the department has increased from 4 500 tot 6 400 so these officials will be able to do even more thorough inspections. The staff position in the department has also improved. In 1982 there was a 23% shortage of staff which has now decreased to a 10% shortage of staff. Actually, the onus is not on the department but on the businessman in commerce and industry once per month to send in a GST cheque together with the form VB5 duly completed. Inspectors do an inspection in loco and they also do desk audits. However, the person in charge of the business certifies the details and the GST is based upon what he certifies. The VB5 form specifically demands that people certify that the details are correct, and the form states the penalties for incorrect information. Section 44 of the Sales Tax Act provides for a fine or a term of imprisonment or both. There is the possibility of a 10% penalty being charged per month and, after 10 months, the penalty may be 100%. In terms of section 13(4) of the Act the department can cancel the GST registration which means the owner of the business has to pay GST on both purchases and sales. From what I have said it can be seen that there is a very heavy responsibility placed on the businessman to ensure that the department receives the full amount of money.

I have no doubt that the majority of people in commerce and industry in South Africa are honest and that they will render the returns to the best of their ability. However, the fact that the department did 9 000 inspections last year is a warning to defaulters that they are in for a very tough time if they continue withholding or evading GST. The Government is doing its very best in this situation. For example, last year the Government paid R264,3 million in subsidies and this year, as we have heard from the hon the Minister of Finance, this amount has been increased to R415 million. On 27 January the Financial Mail said that GST was a realistic option and on 25 January Finance Week said that any politician or businessman who expressed shock at the increase in GST from 6% to 7% should not be in a position to express an opinion on economic matters. On 31 October, just two days prior to the referendum, even the hon member for Yeoville himself predicted a tax increase. Now that the tax increase comes, he is so surprised about it. The hon member knows full well that the hon the Minister took the best option to the South African economy. I read in The Cape Times of 27 January 1984 in an editorial that The Cape Times hopes for a national campaign against certain aspects of GST. This is part of undermining the morale of the people of South Africa.

*It is a shocking state of affairs that a newspaper should instigate a campaign against a part of GST. The PFP and their mouthpiece came out of the referendum with a flea in their ear and now they are trying to stir the people of South Africa up into a revolt against tax. There are many people who are having a hard time of it, but their patriotism makes them realize that tax is necessary for prosperity, security and stability.

Mr Speaker, I am sure that the House will understand if I do not devote one moment of my precious time to replying to what the hon member Mr Aronson has been saying—a tirade, a personal tirade against my hon leader and against the hon member for Yeoville. I do not think either of them cares one hoot what that hon member has to say about them.

I wonder how many members of the House were struck, as I was the day before yesterday, by the thought that at the very moment that the hon the Prime Minister was telling us that 22 February, next Wednesday, was to be declared a day of prayer and atonement, one of the nastiest aspects of NP policy was being revealed in a little Black rural village in the Western Transvaal? I refer of course to the forced removal of the people of Magopa. The hon the Minister of Co-operation and Development informed me on a number of occasions that this was a decision taken in the seventies by one of his predecessors, Mr M C Botha, who was then the Minister of Bantu Administration and Development. Last year the Government attempted to implement that decision which was taken some 11 years ago, as if nothing had happened in the meantime which could make the Government change its mind.

Last year the schools at Magopa were demolished, the bus service was discontinued, the machines for the water pumps were removed and the people were informed that they would have to go. Some members of the tribe agreed to go, with a headman who, I may say, was subsequently deposed by the tribe because they said this man had been fining members of the tribe and he refused to submit the books of the tribe to audit. At a mass meeting the man was deposed. This man began negotiating with the Government and he agreed to go together with a number of families from Magopa. They were removed to Pachsdraai, inside Bophuthatswana, and their houses were demolished. The schools, as I say, were also demolished. Therest of the people—the majority of the people, I may add—refused to move at all. In November of last year they were told that if they did not go voluntarily, they were going to be moved anyway.

Then there was a great deal of adverse publicity, both in the local Press and in the overseas Press, especially in the United States in the The York Times and the Washington Post. Because of some quiet diplomacy behind the scenes, those remaining families at Magopa were given a reprieve by Father Christmas, by none other than that hon the Minister of Co-operation and Development.

During the no-confidence debate the whole issue of Magopa was raised by myself and later by the hon member for Sea Point in more detail. The hon the Minister of Foreign Affairs also came into the debate on this issue. He gave the House what was in fact a lot of misinformation about Magopa, which I have no doubt he gave in good faith, misinformation which had been given to him by officials. He referred to the deposed tribal chief and the man who had been elected to replace him and who happened to have the same name, namely More, as being brothers. They are in fact not brothers at all. The name More in that area of the Western Transvaal is evidently as familiar a name as the name Dhlamini is in Swaziland or many of the names we have in South Africa. The Minister referred to people who have had title deeds to land in that area since 1912, as squatters. He said that there was no water and only a ramshackle school and in fact nothing worth saving there. There were, in fact, two reasonably decent schools and, as I have mentioned, there were boreholes. The hon the Minister went on to say that the news that had been published earlier was a lot of nonsense. He said that after newsmen had been taken on a visit by the Deputy Minister of Foreign Affairs and the hon the Minister had got these two “brothers” together and had tried to reconcile them, it became obvious to everybody that this whole business was nothing more than a quarrel between two Black brothers, a rift, as he put it, between two Black brothers. I then interjected and asked the hon the Minister, “Are you still going to move the other people?”, and he said that he was dealing with a specific case and said that members contribute to sending out reports on South Africa and that they must please check their facts. So should Ministers check their facts before they come to this House.

I want to bring us up to date on this issue because things have been happening since then. Since the reprieve, things have been happening. I hope that I will give only the facts. I have no doubt that the hon the Minister or his deputy will correct me if I am wrong.

My information is that the people of Magopa attempted to get an interdict against the removal. That failed. They then attempted to get permission to appeal against the refusal, and that was also refused.

Some of them.

Those who remained, yes. The others who had already been removed to Pachsdraai and had been given land and the deposed leader who is now living in a house which belonged to a White farmer obviously did not have anything to do with it. The remaining people who wanted to stay where they were, appealed and that was refused. Almost immediately afterwards the eager beavers of the Department of Co-operation and Development got busy and started once again with removal of the people at Magopa. I do not know whether the hon the Minister of Co-operation and Development is ever informed beforehand whether his eager beavers are going to go into action or whether they take it upon themselves to do so. This week, undeterred by all the adverse publicity which they knew would accompany the move, international adverse publicity as well as local, they attempted once again to get the people of Magopa to move. I might add that this time they were supported by a large contingent of armed policemen who were in vans and who cordonned off this village. I am told that apart from a couple of Black journalists, no members of the Press, local or from overseas, were allowed in. I am also told—I do not know whether this is correct—that consular representatives were not allowed to go in. Naturally all the other people, including the ladies of the Black Sash, were also not allowed to go in. The police, or maybe it was a policeman, on the first day informed the newspaper people that the area had been declared an operational area (which I am told is a term which can only be used officially by the Defence Force and not by the police at all), and that they were not allowed to go into the area. A term was used which gave the impression of these newsmen that war had been declared by the police on a peaceful Black rural village. What an impression to create! The next day the police were challenged on this and they then changed their tune and said that it was not an operational area, but then invoked a section of the Development Trust Land Act of 1936 and said that nobody could enter the area unless they had permits from the local magistrate. Everybody trekked off to Ventersdorp to see the local magistrate to ask for permits to enter the area, and all, without exception, were refused. Nobody was allowed to enter. Nobody was, by the way, allowed to go to Pachsdraai, the area to which the people were to be removed and where some of them were already settled. According to the hon the Minister for Foreign Affairs R10 million has already been spent on this area to build schools and a clinic and to supply water. According to the hon the Minister of Co-operation and Development, R8 million was spent. A couple of million here or there does not really matter much.

Nobody has explained to us why that R8 million or R10 million could not have been spent at Magopa itself and why the people had to be moved before any money was spent on improving conditions for those people. However, all of us know that National Party ideology comes down from the Mount and if in 1973 Mr M C Botha said that the people of Magopa had to be removed from the land which they had occupied since 1912, then of course they must go, despite the consequences to the people concerned and despite the consequences to South Africa.

Behind this cordon which was provided by armed police, the Department of Co-operation and Development removed all the belongings from the houses of these people, loaded them onto lorries and sent them trundling off to Pachsdraai. The people themselves were loaded onto buses and I believe the last of the families were removed today. They were sent on buses to Pachsdraai and those who said they would rather go to another area, were allowed to go under their own steam and at their own expense to Betalie. All that is left of the rural village of Magopa are the ancestral graves and the rubble of broken houses, after 70 years of peaceful occupation.

Once again, what does the hon the Minister think? The hon the Minister of Foreign Affairs said that everything had died down as soon as the Press were told the true facts. But of course everything died down because the people had not been removed at that time, and there was therefore nothing to report. However, I can assure the hon the Minister that the same glaring headlines will appear in the Washington Post, the New York Times and the London Times and all over the Western world about the action which has now been taken by this Government against the people of Magopa. This exemplifies what is known as a forced removal. It is a typical forced removal thrust upon helpless Black people by an all-powerful bully of a government in the interests of one thing and one thing only, namely the implementation of the grand plan of apartheid. It is bad at any time, but the timing now is incredible.

Right now, in the United States there is a lobby for disinvestment in South Africa and in 13 different states motions are being moved for disinvestment in South Africa. In Congress very stringent punitive measures have been passed against South Africa. This insensitive Government comes along and goes ahead with the Magopa plan. This demonstrates something which we said throughout the referendum, namely that the Government has no intention of deviating from its grand apartheid plan. So much then for all the big talk of reform and change which we heard so much about last November when the referendum campaign was on.

Mr Speaker, in an objective community one must assess facts objectively. Then, too, one assumes that the facts provided by an attractive, articulate woman are correct. One would like to assume that. It is also the case that that is the world’s view. Moreover, it ought to be correct if one lives in an objective community.

On the other hand, it is also true—and it is necessary to say this right at the outset—that it is difficult for everyone to move and to transfer from one place to another, whatever the circumstances. It is also true that if such a move takes place, everything must be done to minimize the effect this may have, in all circumstances. This is a basic point of departure one must have.

Why does there have to be a move?

If the hon gentleman waits a little, he will find out.

There is another factor to be taken into account. It is that when one conveys one’s facts one must ensure that those facts are correct.

That is right.

The hon member said so here. However, it is also true that when one speaks for the Press, for outside publication, one’s facts must be correct, and the facts that are published must be correct as well.

Right.

If we are in agreement on those points, then it is important that one should take a look at the history of this situation. What was published in this connection? On 16 November 1983 the following appeared:

[Inaudible.]

This is something that is stated as a fact, but also to leave an impression. Later in the same report the following was said:

Then it is said with regard to this specific matter that as far as these people’s ownership is concerned, the diamond rights are held by this tribe and that this Government is denying these people the right to utilize that benefit and is moving them against their will to a place where there are no such rights. That is the public impression that is being created about what this Government is doing to a group of innocent people. I want to say, with all due respect, that the hon member has been a party to this.

Deny one of the facts I have stated this afternoon.

I am still coming to that. I have not yet finished with the hon member. Then the following statement is publicized:

It is also put like this in the other reports:

That is not correct:

These numbers are important because they leave certain impressions.

Now there is one point I must put very clearly to the hon members. As regards the first part of the removals, the removals that Jakob More was involved with, 250 families were involved and not “almost 200”. The last section, that is now in the process of removal …

What do I have to do with that? I did not say that.

No, that is part of the whole proposal.

*It is very interesting that as soon as one tries to expose this incorrect reporting, this mistaken support of the PFP, all of a sudden it is irrelevant. At the outset the hon member asked me to state the true facts. Is that correct? I am merely trying to correct the hon member. This is only part of it. The other is still coming.

The situation is that the biggest group of these people, those who support Jakob More, have moved. However, that is not the impression that is created. There are two reasons why this is not done. The first is that, as the hon member for Houghton, too, said in her speech, it is being said that the two Mores are not related. It is being said that Jakob More and Lazarus More are not related.

They are not brothers.

Are they related to one another? [Interjections.] According to the customs of the Black people … [Interjections.] One cannot teach a Philistine the right doctrine if he does not want to understand it. According to Black custom, surely it is the case that they have half-brothers and that within that context they regard themselves as brothers. Mr Lazarus More, who stayed behind and did not want to move—the hon member must be patient and listen carefully—and who is also the head of the faction, said at a meeting convened in Pretoria by the hon the Minister that he had gone to Cartetonville where Mr Jakob More was working as a mechanic in a garage and had fetched him and brought him back to the tribe to become the chief of the tribe. He said that at the meeting. He said that according to their tribal custom he was the natural successor. That is the next point which the hon member publicized an incorrect interpretation of in this House today.

However, there is another point relating to this particular matter.

You should rather tell us why they had to move.

I shall come to that. Just be patient. I will come to the point. The hon member must just listen while I explain. [Interjections.]

*The hon member for Houghton contended that Mr Jakob More had been deposed by the majority of the tribe due to certain reasons. Is the hon member unaware that according to tribal custom the chief of a tribe cannot be disposed? [Interjections.] That is according to their custom. Mr Lazarus More admitted that, too, at the meeting. If hon members of the PFP want to act in the interest of that group of people, then they must ensure that they act in accordance with local customs and in accordance with the honest approach of those particular people. Mr Lazarus More admitted at the meeting the principle I am stating here today, viz that a chief who has been officially appointed cannot be deposed. That is the first point of principle.

Another point of principle, too, is involved. It is true that there is a dispute in the tribe. That we must admit. [Interjections.] If hon members would only be quiet, I could explain what is going on. In all fairness, that is what I am trying to do. There was a dispute within the tribe and in October 1981 objections were advanced about the handling of the affairs of the tribe. As a result of that, the Department of Co-operation and Development had an investigation instituted. The investigation was held in January 1982 and the findings of the investigation were made known to the tribe. It was found that the bookkeeping left something to be desired, but that no irregularities had occurred. That is the official finding that was made known to the tribe at a meeting of which everyone was aware. [Interjections.] Today the hon member for Houghton adopted an attitude and tried to create an impression that in my opinion was wrong and that, moreover, did not do justice to either the Black people or the hon the Minister. The findings were made known to the tribe and they accepted them as such. Those who were dissatisfied did not want to accept that, however. However, where do the majority of those who did not want to accept it, live? Where does Mr Lazarus More live? Where does Mr Gatishwe live? Where does Mr Philip More live? They live in Johannesburg, in Vereeniging. They do not live in that area, and therefore their interests are not in that area either. When I asked Mr Phillip More, “Where are your house, your wife and your children?”, his reply was: “On the Rand, in Johannesburg.” Therefore, if the meeting had been made known, those who did not live there were not aware of it. However, that does not prove that they were in the majority; on the contrary, all these events should serve as evidence that those people were indeed in a minority and that they were trying to create an impression of power, strength and majority as a result of the frustration they had experienced in the tribe. Why did they try to do so? It is important that one should take note of this as well.

I want to come back once again to the question of who these people are and why they are trying to create such an impression. As regards the resettlement action which took place, the hon member for Houghton is correct. It goes back to 1979, when the first meeting was held. In February 1979 the first meeting was held, followed by meetings in June of that year and in January 1980. Subsequently meetings were also held in February, May and June 1982, specifically with the purpose of persuading the people to go to Pachsdraai. The hon member for Bryanston asked why this happened. However, that is self-evident. In 1979 the hon the Prime Minister appointed the consolidation committee under the chairmanship of Mr Hennie van der Walt in order to examine once again, within a certain framework, the overall planning of consolidation. Certain recommendations were made within that framework and it was recommended inter alia that certain groups of people should be moved. [Interjections.] Let us therefore state clearly that in terms of this action there are certain resettlements that have to take place and, just as Whites find it extremely difficult when they have to vacate their farms, Black people, too, find it as difficult to leave their homes. [Interjections.] What is also clear, however, is that the co-operation of the people who have to be moved is obtained as far as possible and they are consulted from time to time in this regard.

However, what attitude does the PFP adopt in regard to this action? What I find strange is that they and the Black Sash and certain other bodies do everything in their power to make matters difficult for those people. That is what they do. The question that now arises—a question that everyone in this country, the Black people included, will want answered—is whether they are the mouthpiece of those Black people, or whether they are perhaps using those Black people as a means to other political ends. [Interjections.] That is an important question, because the PFP has other political aims for which they use certain Black people. Of course, these things are to the detriment of those people and to the benefit of the PFP. [Interjections.]

In the speech by the hon the Leader of the Opposition to which I have already referred he also says the following:

Surely, Mr Speaker, violence and coercion are not the last resort of the Government. In point of fact, the Government has made such good progress with the leaders of the national states and the leaders of the independent states that some of those leaders are co-operating with regard to this process in order to ensure that the whole process can be completed to the benefit of everyone involved. Surely that is so. If anyone contends that that is not correct, then I ask on what basis Mr Lazarus More and Mr Phillip More, who live in Johannesburg, and who, for all purposes of our discussion, are urban Black people who live entirely in the urban context, can lay claim to their tribal links and their tribal rights in this specific matter. [Interjections.] If there is no longer any tribal link or family tie and they are so urbanized, why are they specifically insisting on these tribal customs of theirs and on the tribal rights they have as far as the land is concerned? If one is to reply sincerely and honestly to this question, then truly one has to say that in the entire process the Black man is becoming urbanized. In the nature of the matter, in this process of urbanization, those Black people are becoming less committed to their tribal customs.

But that is exactly what I said.

Very well, we are not arguing about that. We are not denying it. It is a basic fact. The fact that they are urbanized, still does not mean that they are entirely free of their tribal and ethnic links. It is specifically on those grounds that we contend that the idea and concept of consolidation is not alien to the tribal context of the Black people, not even within the urban context. That is the principle that applies here.

I also have a few things to say about certain other matters that have come up here. The position of the people who moved from Magopa should be noted. It is important to bear in mind that in the process of resettlement, their circumstances improved considerably. The principle that applies is the fact that they are far better off. We call to mind, for example, the schools and clinics that are now at their disposal, and then of course the water situation about which, according to the hon member for Houghton, the hon the Minister of Foreign Affairs had given the House faulty information. As far as that allegation is concerned, I wish to point out that it is untrue. The hon the Minister of Foreign Affairs was quite correct in that regard. I wonder whether the hon member for Houghton knows how many schools there were at Swartrand.

There were two.

There was one.

†I should like to know from the hon member for Houghton how many schools are at Pachsdraai.

That is not the point in question. [Interjections.]

The hon member never investigates anything. She has also not investigated the conditions at the new place where these people will be moving to. All she is doing, however, is to criticize conditions in the place they come from. [Interjections.]

*The principle with regard to the resettlement of these people is specifically that it is the point of view of the hon the Prime Minister that it must be a development-oriented action.

They do not want to move. [Interjections.]

They do not want to move? Why do they not want to move? Is it because you indoctrinate them not to go? [Interjections.] That is one of the reasons.

*From time to time hon members opposite have subjected the hon the Minister to vehement criticism about the way in which he deals with the matter. That hon Minister displayed a degree of patience and willingness to take trouble the like of which I have never encountered in any other person. Bearing in mind the way in which he handled this matter, I think the hon member for Houghton could take a leaf from his book as regards his patience and his method of approach.

I have a few letters here and hon members opposite would do well to listen to this. The title of this first letter is “Resettlement of Squatters”. It concerns the people at Roosboom in Ladysmith. The letter reads as follows:

This letter was signed by a group of the leading figures who were involved in that matter. Here is a second letter which reads as follows:

I have several letters of this nature that we received after resettlement took place. It is the indoctrination in advance, by certain people, of innocent and credulous Black people that confuses them. I think it is important that the world, too, should know that the Black people are being misused by certain Whites and other elements within South Africa for their own political benefit, instead of their speaking in the interests of those Black people.

With reference to the removal that took place yesterday and today and which the hon member for Houghton made specific reference to, I wish to ask her here across the floor of this House: Did she speak to the hon the Minister of Law and Order yesterday in regard to this matter?

Yes.

Did she say that she was satisfied with the answer of the hon the Minister of Law and Order? [Interjections.] The hon member asked the hon the Minister of Law and Order about this yesterday. [Interjections.] That removal took place and it was alleged that “There are going to be killings. There is going to be shooting”. That kind of threat was made. The Department of Co-operation and Development took action and according to the reports we received, some of these people who were involved in the removal maintained that they were grateful that the department had moved them because they had been subjected to intimidation to prevent them from moving. Now, I ask myself why many of these people are at present so prepared to go to this place to prey upon what they might be able to find fault with. One newspaper spoke about an “operational area” this morning. The hon member also spoke about an “operational area”. Surely the hon the Minister of Law and Order said to them yesterday that there was no “operational area”. With all due respect, the hon the Minister informed the hon member yesterday and told her that there was no question of an “operational area”. He also told her—it is time that these things be recorded in Hansard—that she could, as regards Major Scheepers … [Interjections.]

Order! I am by no means certain who is making a speech at the moment. At the moment there are three people speaking, but only one of them has the floor and that person is the hon the Deputy Minister. The hon the Deputy Minister may proceed.

I said at the outset that one desires to listen to and believe an attractive and articulate woman. However, I am not sure that she has not gone back into the cave in order to brew up something, or whether she is not perhaps sending out her accomplices to cause trouble. I am grateful for the opportunity of having her listen to me for a while.

The hon the Minister of Law and Order told her yesterday that she could telephone Major Scheepers, the chief liaison officer in Potchefstroom. Did she do so? [Interjections.] No, she did not telephone him. It did not suit her to telephone him, because she would not have obtained the right information that she wanted to publicize. It was for that reason that she did not telephone him. If the hon member had really had these people’s interests at heart, when she had the opportunity to do so, she would have telephoned the man who deals specifically with that matter. The Minister recommended it. Why did she not do it? That was the opportunity for the hon member to telephone that man and obtain the precise information about what was going on and what the intention was, but she did not do so. However, she went back and tried to create trouble with talk of an “operational area”, while the man who was in control could have proved the contrary. She did not telephone him because she did not want to hear that.

If such resettlement actions proceed, then the hon the Minister will continue to do what he has done in the past—he sat with both groups of people for hours and discussed the matter, affording them the opportunity to resolve the matter—and then we shall again get letters from the same people similar to those that I quoted to this House this afternoon, thanking us for the opportunity created. I know the Ventersdorp area. I know the part they come from. It is not a bad part of the world. It cannot be bad, because it is in Ventersdorp. [Interjections.] However, I do want to point out that the place they are going to is just as good or even better from an agricultural point of view. That is what is important. The opportunity created for these people there is better than what they had. The facilities there are also better than what they had.

All that we on the Government side are asking is that this matter be approached objectively. A removal always entails problems and we ask that matters be made as easy as possible for those involved. If a resettlement must take place …

Why “must”?

… in the interests of all involved and after discussions … [Interjections.] I wish the hon member for Port Elizabeth Central would be quiet. The biggest mistake I ever made in my life was when I bought a Malcomess windmill. [Interjections.]

If resettlements have to take place and if law and order had to be maintained in the country, the Government will not join that side of the House in allowing lawlessness to run riot in this country, thus harming everyone’s interests.

Mr Speaker, White civilization in Southern Africa is based on two principles. The first is a Christian view of life and of the world, and the second an urge to be free. These two principles were born in and have grown from the professional group whose members go to make up the nobility of our people, ie the farmers. The farmers, their wives and their children have transformed the nature of this Southern land into culture. Their urge to freedom has never been imperialistic, but they have defended their freedom with faith, courage and heroic force. From the farming community came the ministers of religion, the teachers, the lawyers, the businessmen, the engineers and all those professional groups which today go to make civilization in this country. In this Southern land with its mineral wealth and strategic position, this simple farming community saw to it that the best of its seventeenth and eighteenth century European civilization established itself.

On these principles, and the culture that was shaped here, are based the principles of the CP, and it is on this basis that we are going to establish and achieve our ideals. The question we should like to put to the hon the Prime Minister and the leaders of the NP is where they are taking South Africa and its peoples. Where are they taking their own people? Quo vadis? On occasion the late Dr Malan also put this question to the Afrikaner people: Quo vadis? It is interesting to note that when he put that question, he himself supplied the answer. He did not say that one should charge recklessly into the future, but he did say that the people should go back to the root principles from which it, as a people, emerged. When we asked the people of South Africa to vote on a Republic in 1960, a question was put to us and we answered it, indicating what the broad basis of the National Republic would be. The erstwhile National Party’s reply was that the foundation-stones of the Republic would, in the first place, be that it would be a democratic Republic governed by the will of the people. Secondly, it would be Christian in character, the result being that today South Africa acknowledges the sovereignty and guidance of God in the destiny of countries and of peoples, with due regard for the freedom of religion of the individual. Thirdly, the language, culture and other rights of the Afrikaans-speaking and the English-speaking people would be upheld and protected. Fourthly, the Parliamentary form of government would remain intact, with a Senate and a House of Assembly. Fifthly, at the helm in the Republic there would be a State President and a Prime Minister, the latter being responsible to the people for the policy and actions of the Government. In the sixth place—and this is very important—the Government would remain in the hands of the Whites, with the non-Whites being given the opportunity for full, independent development in their own areas. That is what the National Party promised the Whites of South Africa with the advent of the Republic in 1960. The present Prime Minister commented at the time on the policy of integration then being propounded by the United Party. The late Dr Verwoerd was then Prime Minister: I quote.

That is the historic run-up to what we had last year. For almost two years we in the Conservative Party had, as our ideal, the pursuance of those principles. On 24 February 1982, however, the hon the Prime Minister, on the basis of a motion of the former hon Minister of Manpower, forced the caucus of the National Party to abandon those principles and accept the principles of power-sharing and mixed government. [Interjections.] We refused to do so and on that basis were kicked out of the National Party. We refused to relinquish the principles of freedom, sovereignty and identity, and for almost two years now we have been pursued and intimidated by the National Party. We have been belittled, and the National Party has done everything in its power in an effort to destroy us. Its newspapers, television and radio have been used for that purpose.

On 8 February of last year, when Mr Fame Botha had the floor, he said the following (Hansard, col 531):

That challenge was accepted at the time by the leader of the Conservative Party and my colleague and friend, Thomas Langley.

The hon member, Thomas Langley.

Yes. Yesterday he was elected the new member for Soutpansberg. A speech made by Adv Thomas Langley in this House on 18 February 1983 concluded with the following words:

In the no-confidence debate this year, as in the two previous years, the question the Conservative Party put to the Government was where it was going. Those are also the words of my colleague, Adv Thomas Langley.

Last year we had a referendum and we debated the yes-question and the no-question posed in that referendum. We debated the issue to the best of our ability in the Select Committee on the Constitution. The referendum subsequently took place, and at the instigation of the governing party, the yes-people achieved a great majority. I want to say here today that it is very easy to analyse that. The yes-vote the National Party obtained is not based on firm principles and a clear-sighted ideal. Underpinning that yes-vote, the NP had the support of the NRP. A large number of NRP supporters, many tens of thousands, voted for them.

At the time the electorate was told that the CP and the PFP were bedfellows. The PFP supporters in the cities were told that they were hand in glove with the CP, the HNP, the AWB, the ANC and so on. [Interjections.] When the revelation came yesterday, however, we were not the ones who were found to be hand in glove with the Progressives. What I want to say is that a large number of the people who voted “yes” are firm adherents to the policy and principles of the PFP. Yesterday’s result in Pinetown showed this very clearly. The NP is therefore underpinned by both the NRP and the PFP. The old National Party is also underpinned by those people who have already capitulated in this country. They also voted “yes”. Those are the people who no longer believe in the continued existence of either the Afrikaner people or the White man as such. They no longer believe in ethnicity.

The overall majority of the people who voted “yes”, however—I encountered thousands of them—were trusting and ill-informed people who believed the National Party to be the old National Party. The CP was a small party regarded with contempt, but yesterday, within a few months of November, we were in a position to defeat the once mighty National Party in that seat which the acting Prime Minister of South Africa represented for many years.

With gossip-mongering. [Interjections.]

Let me tell that hon Minister that we shall be talking to each other again at a later stage.

Sir, this National Party base is starting to crumble. We see it happening. The National Party may still be telling its stories today, but the people who know politics in South Africa, know it is true.

The NP adheres to the same principles as the NRP. The tragedy of it all is that the NRP did not lose yesterday merely because it was the NRP as such. It lost because the old National Party has shifted over to their principles and has virtually taken them over in toto. [Interjections.] That is so. It is tragic, and I am sorry for the NRP. [Interjections.] I know they do not need my sympathy. The other tragic aspect is that yesterday the NP did not support the NRP the way NRP supporters supported the NP in Soutpansberg yesterday by voting for it. Yesterday they left the people, who had helped them in the referendum, in the lurch. They left the NRP in the lurch, as they have done with the principles of the old National Party and as they have done with the Whites in South Africa. [Interjections.] That is the tragedy of it all.

I want to tell the NP that adhering, as they do, to the principles of the old United Party, they will disappear as the old United Party disappeared. The NP’s left wing will take their seats with the left wing of the PFP. Let me tell the hon the Minister of Posts and Telecommunications, who is now sitting there looking at me like that, that in five to 10 years’ time the NP will have edged him out. I would be glad about that. I would tell him: Now come back to the people who stuck to the principles we stood for together. [Interjections.] The NP’s base has therefore fallen away.

Let me say that the hon the Prime Minister is the biggest danger, is the NP’s downfall, because he does not build his party’s policy on actual principles, because he does not keep his own caucus informed and because he does not keep the general electorate informed either. Last year he said that the CP’s homeland policy for the Coloureds would cost between R80 billion and R85 billion. I telephoned the office of the Prime Minister and spoke to both his private secretary and the secretary of his department. I wanted to know from them whether such an investigation had been carried out. I wanted to obtain the facts, see them with my own eyes, so that I could study them. What was the reply the hon the Prime Minister gave me last year? His secretary informed me that the hon the Prime Minister was conveying these facts to me by virtue of his being Prime Minister and on the strength of the information he had at his disposal. At the beginning of this year I put the following question to the hon the Prime Minister (Question 2, Wednesday, 2 February 1984):

1. (1) Whether the Government has instituted an investigation into the cost of establishing a Coloured homeland; if so, (a) when was the investigation ordered and (b) who undertook the investigation;
2. (2) whether the report of the investigation will be tabled; if not, to whom will it be made available?

The hon the Prime Minister then gave me the following reply:

This year there have been repeated questions, from the PFP and from us, asking the Government to tell us what the new tricameral system was going to cost. Hon members can check up on this, but up to now neither the hon the Prime Minister nor the Government has yet told us what the new tricameral system is going to cost. Not until the hon the Prime Minister submits a scientific report on this matter to me, will I believe him. He has misled the White voters of the country, telling them things that are untrue. [Interjections.] Not even with his own department at his disposal, has he himself worked out the price of his own policy. Has the hon the Prime Minister ever worked out what PFP policy would cost? Has he ever worked out what NRP policy would cost? On television, however, and before audiences from one place to another, he says he has worked out what the CP’s homeland policy is going to cost. Until he can give us those facts, I am saying that that statement he has made to the people is untrue. [Interjections.] One of the reasons that will give rise to the NP’s fall lies in the fact that the hon the Prime Minister and the hon the Minister of Finance are struggling to get our monetary affairs in order. Have Government officials, since the advent of the CP, drawn up a report of the costs of our homeland policy so as to have been able to do these calculations? Have the officials of the department of the hon the Minister of Constitutional Development and Planning not even worked out the costs that are going to be involved in the new tricameral system? Let the NP go ahead and make those mistakes, but this is the kind of thing that will bring about the fall of the once mighty NP.

Last year the hon the Prime Minister made a speech which was reported in The Citizen of 17 October. In reply to questions about the new constitutional dispensation, The Citizen reports his answer as follows:

In other words, the hon the Prime Minister may be speaking of his members, but he may not speak on behalf of the PFP, the NRP or the CP. He may say that his members do not know what is in the constitution. I quote further from the report:

The hon the Prime Minister goes and says that members of his own caucus do not even know the constitution. He tells members of the voting public that they must accept the broader principles and leave the details to the legal men and people in Parliament. The people sitting there behind the hon the Prime Minister, those people from Keerom Street who, as far back as the Dr Verwoerd and Adv Strijdom era, never agreed with them, those people who should have joined Mr Japie Basson when he left in 1958—today Mr Japie Basson is a member of the President’s Council—are the people who worked out this policy. So the hon member can tell me all those things, but eventually the facts, the truth, will triumph.

Today the hon member for Smithfield made another reference to the hon member for Waterberg’s Ellis Park speech. I invite him and the hon member for Virginia to appear with me on any platform in the country and indicate there in what respect they disagree with what was said in that speech. Mr Piet Cillié is one of the NP’s thinkers.

You are starting with that again.

Yes, and I shall go on saying it until the public knows it. Mr Piet Cillié says the Government has a communication problem at the moment, but if one wants to implement such unacceptable ideas, one must send people forth as Christ sent forth his disciples.

You know that is not true.

The hon member for Waterberg is one of the best theologians in the country. [Interjections.] I am saying that here today, because I am in the best position to talk about that. The hon member, however, is called every name under the sun, but Mr Piet Cillié says that just as Christ sent forth his 12 disciples, the NP must go forth and topple the policy of ethnicity. That is what one of their top men says.

I am sorry for the hon the Minister sitting here in front of me, the hon the Minister of Internal Affairs, particularly with the kind of brother he has. The hon the Minister is saddled with Dr Wimpie de Klerk, Prof Piet Cillié and dozens of others I could mention who are in the process of destroying ethnicity, of destroying his people in South Africa. [Interjections.]

The CP is a small party. We belong to a people who are few in numbers in the world line-up. We cannot boast of numbers like those in Russia, America, France or Germany. We are a small people, not rich in earthly goods either. But the pattern of life and the culture of the Afrikaner people and the Whites in this country are based on the finest principles of European civilization. Although we are a small people, scant in numbers, with these principles we shall seek the freedom and independence of the Whites, and I want to appeal to all conservative-minded people, English-speaking and Afrikaans-speaking, to join our ranks. And I can give the Black people, the Coloureds and the Asians the assurance that what we in the CP demand for ourselves, we are also prepared to join them in working out for themselves.

Mr Speaker, the hon member for Rissik is certainly entitled to a little breast-beating about the Soutpansberg result. I shall be replying to his speech in detail on Monday, but in the minute or so that is left I just want to make one statement in response to what the hon member said. He says that the country-wide positive result of the referendum was due to the fact that the public was not fully informed. I want to make the statement, however, that if the public was ever exposed to a debate on how they should vote on a single question, it was in the recent referendum. [Interjections.] There is no doubt that one of the chief problems in the recent by-election in Soutpansberg was the confusion created by CP misinformation. [Interjections.] The result there was the outcome of a series of stories centring on personalities, centring on allegations and negative tactics. Not more than 10% of the votes cast in favour of the CP were cast for their policy. The votes cast for the CP in Soutpansberg were based on the politics of fear, the politics of hatred and the gossip-mongering politics propounded by that party. [Interjections.] Sir, in this debate we shall be exposing that politics of fear, politics of hatred, the gossip-mongering politics as it has not been exposed in a long time.